Administration February 15, 2011
Pension Funding Has Modest Muni Bond Cost Impact
February 15, 2011 (PLANSPONSOR.com) – A new study analyzing 37,500 state and local government bond issues found that pension funding raises rates by a modest 3 to 7 basis points.
Reported by Fred Schneyer
The study, released by the Center for State and Local Government Excellence, said that while rating agencies consider pensions when judging state and local governments’ economic fitness, pension funding does not have a statistically significant effect on governments’ bond ratings.
Pointing out a flurry of state and local government activity dealing with pension funding since the economic downturn began, the study contends: “Government officials recognize the importance of strengthening pension assets, not only because of their obligations to employees and retirees, but also because they want to retain good bond ratings.
Researchers pointed out that pension expense accounted for only 3.8% of state budgets in 2008.
The study report is here.
You Might Also Like:
Public-Sector Pension Changes Create Residual Effects
Evidence mounts to show how cuts to public-employee pension benefits have reduced the ability of public-sector employers to compete with...
GASB Proposes Implementation Guide for OPEB Standards
The proposed Implementation Guide provides answers to questions intended to clarify, explain, or elaborate on the requirements of GASB Statement...
Most Public Pensions Received Insufficient Employer Contributions
An analysis covering the years 2006 through 2014 shows most of the 160 plans studied received insufficient employer contributions to...