Wharton Pension Research Council Working Papers
 

Title

The Case for Marking Public Plan Liabilities to Market

Document Type

Working Paper

Date of this Version

10-1-2008

Abstract

State and local U.S. pension plans hold an estimated $3 trillion in assets, with market values regularly disclosed in plan financial statements. By contrast, public defined benefit pension liabilities are routinely reported at actuarial values which may differ substantially from market values. We propose that a more accurate way to value plan liabilities measures the present value of accrued benefits discounted at market interest rates for fixed income investments that are (or are nearly) default-free. We illustrate the difference between these measures for a set of public sector pensions using publicly available information.

Comments

The published version of this Working Paper may be found in the 2009 publication: The Future if Public Employee Retirement Systems.

Working Paper Number

WP2008-20

Copyright/Permission Statement

© 2008 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

Acknowledgements

Opinions and errors are solely those of the authors and not of the institutions with whom the authors are affiliated. This research was presented at the 2008 Pension Research Council Symposium.

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Date Posted: 09 August 2019