ASSET OWNERS

Moody’s extends liability comment deadline to Sept. 30

Moody's Investors Service extended to Sept. 30 the deadline for comments on its proposed adjustments for evaluating public pension liabilities, according to a news release from the credit rating agency.

Comments, previously due by Aug. 31, can be submitted to cpc@moodys.com. A final report is expected to be released by the end of the year.

The adjustments proposed in a report in early July, would have the effect of increasing the unfunded actuarial accrued liability for state and local governments to $2.2 trillion from $766 billion at the end of fiscal year 2010. The proposed changes are not expected to result in ratings downgrades for states, but could result in downgrades for local governments.

The four main adjustments to pension reporting Moody's is proposing are:

  • Multiple-employer cost-sharing plan liabilities will be allocated to specific government employers based on proportionate shares of total plan contributions.
  • Accrued actuarial liabilities will be adjusted based on a high-grade long-term corporate bond index discount rate (5.5% for 2010 and 2011).
  • Where possible, asset smoothing will be eliminated in favor of market or fair value as of the actuarial reporting date.
  • Annual pension contributions will be adjusted to reflect the foregoing changes as well as a common amortization period.