How Do Public Plans Value Their Assets?

The Center for Retirement Research at Boston College sought to answer that question in a new brief that “provides an update on the investment performance of U.S. public pension plans since 2001 and introduces new Governmental Accounting Standards Board reporting on the fair value methods of pension plan assets.”

Public plans, in aggregate, fell short of their assumed return in fiscal year 2018 (the most recent reported annual data), with an average return of 6.2 percent compared to an average assumed return of 7.2 percent…..Since 2001, plans have incrementally reduced their assumed return from 8.0 percent to 7.2 percent. But, the average annualized return for public plans from 2001-2018 has been only 5.9 percent. (page 1)

Starting in 2017, the Governmental Accounting Standards Board (GASB) has required public plans to disclose how the value of their investments is determined. The new standard – GASB 72 – .. use[s] the… fair value hierarchy for disclosure purposes:

  • Level 1: Assets with an immediately known, and quoted, market value of redemption (e.g., stocks and Treasury securities).
  • Level 2: Assets without known quoted prices, where fair value is modelled using observed, direct or indirect, market values (e.g., corporate and municipal bonds).
  • Level 3: Assets where fair value is determined using unobservable assumptions (e.g., real estate appraisals).
  • Net Asset Value (NAV): Assets for which a fair value cannot be readily determined (e.g., private equity funds.)

 

 

[F]air value asset data from new GASB disclosures show that – after properly accounting for NAV assets – nearly a quarter of public plan assets are likely valued based on appraisals. (page 3)

13 responses to this post.

    • Posted by Rex the Wonder Dog! on September 3, 2019 at 8:54 pm

      “Wanted to get this to you John B… “
      John C Anderson stop spamming us with these MEP bailout “talking point” wingnuts. This entire “interview” is nothing more than a giant “talking point” for us, the taxpayers, to BAIL YOU and your Pals OUT. Not happening. The Butch Lewis Act is DOA. It is a fraud and scam. Not happening.

      Reply

  1. On Topic, might want to discuss the two differing accounting standards used that complicates Public versus Private plans figuring of liabilities… “What is the difference between FASB and GASB?
    STANDARDS BOARD (GASB) … The GASB is one of two boards that establishes GAAP. The other is the Financial Accounting Standards Board (FASB). While the GASB has jurisdiction over financial reporting by governmental entities, the FASB establishes rules for private sector accounting.”

    Reply

  2. Posted by Rex the Wonder Dog! on September 3, 2019 at 8:47 pm

    “But, the average annualized return for public plans from 2001-2018 has been only 5.9 percent. (page 1)”
    There are going to be a whole lot of public employees needing baby wipes when the next downturn arrives and their pensions take a 50%, or more, haircut 🙂

    Reply

    • THere are going to be a whole lot of private sector employees needing baby wipes when the next downturn arrives and their 401k’s take a 50% haircut and they get laid off.

      Reply

      • Posted by Rex the Wonder Dog! on September 3, 2019 at 8:55 pm

        But the private sector employees are not getting $1- $5 million pensions at age 50…

        Reply

        • So they won’t need baby wipes then? Why not?

          Reply

          • Posted by Rex the Wonder Dog! on September 4, 2019 at 3:03 pm

            We’re stronger, mentally, physically and emotionally, than public employees. We have to be, we deal in real life 🙂

          • Ha. Total bullshit.
            The real world. Lol.
            Truth is there are good and bad people everywhere. In all facets of life. It is just that you are jealous. Live and let live Rex. Give it a try. Instead of constantly hating. Guess the cops getting doused by piece of shit folks in the city were not living in the real world. Lol. But the stupid punks who did that are? That is a straw man argument to hide your jealousy Rex. I expect better out of you. I’ll keep the pension and stay in this “fantasy?” World. Where I don’t have to pay my mortgage? That one.
            Just another loser.

          • Posted by Rex the Wonder Dog! on September 4, 2019 at 9:28 pm

            LOL…EG you need to start paying me RENT…for living inside your head 🙂

          • Posted by Rex the Wonder Dog! on September 4, 2019 at 9:32 pm

            Forgot this!

          • Ha. I’m calling animal control. We need the dogcatcher. Send this puppy to the pound.

          • And wouldn’t you be paying me rent to live “inside my head”. Cmon wonder pup.

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