Impending changes in Governmental Accounting Standards Board standards in 2014 and 2015 should increase public pressure on decision-makers to reform state and local government pension plans, according to a report from Fitch Ratings.
The changes, set to begin in fiscal 2014 for pension plans and fiscal year 2015 for employers, will result in the reporting of weaker funding ratios than under current standards, as well as in a more limited ability to spread over time the cost of addressing the liability, according to Fitch's Local Government Pension Analysis.
The report states that “GASB's enhanced reporting standards will result in considerably more data to evaluate local governments' pension burden in the context of other long-term liabilities,” although that likely will not result in significant ratings changes.