Unfunded pension liability issue
Pointing out that 82 public pension plans in Texas have unfunded liabilities totaling $23 billion, Attorney General Greg Abbott suggested several reforms Monday to protect taxpayer interests along with those of government retirees.I first noticed the city of Houston's unfunded pension liability in its audits 30 years ago and required disclosure in it official statements used in bond offerings. The problem still needs attention, but when you compare it to the unfunded liability of the Social Security system it seems quite manageable and at least people are focusing on the problem.
Unfunded liabilities are the difference between a pension plan's assets and the anticipated future cost of providing benefits to employees in the system.
"Our analysis shows that there may be best practices that plans can use to help them reduce or eliminate unfunded liabilities," Abbott said, "without burdening taxpayers or beneficiaries."
Abbott, presenting his findings at a convention of the Texas Pension Review Board, outlined four key areas for reform:
•Eliminate conflicts of interest between fund managers and pension board trustees and those they do business with
•Require actuaries to register with the state oversight board
•Balance taxpayer interests with employer and employee interests in determining makeup of pension plan trustees, and
•Consider passing new laws creating civil or criminal penalties for funds that don't file required annual reports.
"I also realize that there are more than 2 million beneficiaries who are counting on all of us — me included — to protect their retirement," Abbott said.
"To get that job done, we must find ways to work together to reduce the more than $23 billion in unfunded liabilities that hang over public pension plans in the state of Texas."
Abbott's recommendations come after the city of Houston's largest pension fund reached an agreement last week to improve its long-term viability.