More than half (72%) of public pension plans follow the Government Finance Officers Association (GFOA) reporting standards in producing their comprehensive annual financial reports (CAFRs), according to a study by The Center for State & Local Government Excellence. About half develop a plain language financial report.
Moreover, the study also found several plans are actively engaging with key stakeholders through robust communications and reporting initiatives. Many are leveraging social media and or establishing advisory committees to garner detailed feedback from their stakeholders.
In its analysis, the firm found “Virtually all the systems in the sample develop an actuarial valuation (annually), an experience study (at an average of every five years), and have a funding policy produced by the system and/or established in state statute.”
All systems in the study’s sample conduct periodic experience studies to measure how closely their plans’ actuarial assumptions match their actual experience through several years. Most plans also have investment policy statements that outline investment risk.
At least forty systems report this on their CAFRs. Meanwhile, at least twenty plans leverage websites to report investment risk and twenty-seven systems detail this during committee meetings. Almost all disclose investment fees.
Plans are also utilizing participant newsletters to provide nontechnical plan financial information. Approximately three-quarters of the sample or sixty-three systems offer content related to the financial condition of their respective system’s plan in their newsletters.
More than 80% of the systems in the sample, or sixty-eight in total, offer board minutes from meetings online and most others make board minutes available upon request.
While the firm notes that large pension funds like the California State Teachers Retirement Plan (CalSTRS) have the capacity to lead strong communications initiatives, it also says “Even small organizations can occasionally survey members and employers to understand if they are effectively communicating with them. For instance, such surveys can reveal how stakeholders would like to receive their information and the level of retirement readiness of their members.”
The study was conducted with input and assistance from the National Association of State Retirement Administrators. The full report “Public Pension Reporting and Disclosure: The Current State of Practice and Examples of What Works Well” can be found here.