Actuarial assumptions used by public pension funds can make comparing unfunded liabilities and annual required contributions with other public plans misleading, according to a Fitch Ratings report Wednesday.
“Comparing the magnitude of a municipal issuer’s pension commitments to its other liabilities or comparing the funded status of one public pension plan to another can be difficult and sometimes misleading due to the wide range of permitted assumptions and methods,” Olu Sonola, director of Fitch’s credit policy group, said in a news release. “Standardizing some of these pension variables enhances the analysis of its obligations.”
Ms. Sonola was not immediately available for further comment.
The report “The Reporting of U.S. State and Local Government Pension Obligations” is available on Fitch’s website, www.fitchratings.com.