Estimating State and Local Government Pension and Retiree Health Care Liabilities

Liabilities for pension and retiree health-care benefits provided by U.S. state and local governments are causing concerns for taxpayers and for those holding government bonds. Many question whether the methodology used to calculate these liabilities is appropriate, since the private sector calculates retirement system liabilities using different methods and assumptions. This chapter reviews and critiques current actuarial and accounting standards under which governmental retiree liabilities are calculated and compares and contrasts these standards to those used by private-sector employers.