In the past couple of years, corporate pension plans have moved to market-based accounting principles, following the 2006 Pension Protection Act and FASB/IAS regulations. With many public pension plans facing funding challenges, the question now becomes whether they will also adopt a similar approach, and move away from traditional actuarial accounting.

Critics of traditional public plan accounting say it lacks transparency and relies heavily on assumed equity returns that may not be realized. Supporters of the traditional approach say that market-based valuations are irrelevant, given the long-term, permanent nature of public sponsors and their obligations.

Andrew Wozniak and Peter Austin of BNY Mellon Asset Management  explore these issues, including an outline of what a market-based public plan system might look like.
For more information or a hard copy please contact, please contact David Zigas at 617 248-6202.

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular MAM product.