The recent report by the Center for Retirement Research (CRR) at Boston College, entitled “How Would GASB Proposals Affect State and Local Pension Reporting,” contains an appendix that has been creating some confusion and concern. Specifically, Appendix B shows a column listing the year in which each of the 126 plans covered in the report will run out of money. As I noted in my posting, these dates are not actual projections by CRR of when a plan will become insolvent.
In an effort to further clarify the situation, PensionDialog discussed these dates with CRR and has posted its interview, which notes that:
- These dates are not reflective of an ongoing plan, and are intended only for use in implementing GASB’s particular liability concept;
- The methodology used to calculate the “run-out” dates was GASB’s, based on an accounting method that does not accurately portray all aspects of an ongoing plan; and
- Purported exhaustion dates previously developed by CRR in March of 2011 (and also found in Appendix B) present a “worst-case” scenario.
The full interview can be found here.