The New GASB Accounting Changes and Your Pension PlanMichael Davisson, Vice President and Senior Financial Advisor, Municipal Pension Services, Univest Bank and Trust Co.
As the saying goes, "the only thing that is constant is change," and the municipal pension world is no exception. In June 2012, the Governmental Accounting Standards Board (GASB) approved Statements No. 67 and No. 68 for pension plans. These new standards were adopted to increase the transparency, consistency and comparability of pension data, thus improving the decision-usefulness of reported pension information. As a result, these statements may have a significant impact on how municipalities calculate and report pension costs and obligations.
How Will These Changes Affect Municipalities?
Here are just a few points that each municipality needs to consider:
- Pension liabilities move from footnotes to the balance sheet
- Must calculate assumed rate of return plus 1% higher and lower
- Imposition of specific formulas for assumed rate of return
- Need for formal investment policy statement
Don't wait to embrace the change; now is the time to evaluate your plan and determine what adjustments are needed.
Univest Municipal Pension Services (UMPS) is a leading provider of accounting, actuarial, administrative, compliance, consulting and investment management services to municipalities throughout Pennsylvania. If you are interested in learning more about how UMPS can help your municipality, please call us at 215-703-5459 or email.
Univest's services are provided by TCG Investment Advisory, Inc. Univest only accepts PA Municipal Pension Plans that are under the purview of Pennsylvania State Law, namely the Municipal Pension Plan Funding Standard and Recovery Act 205 as well as the Police Pension Fund Act 600. Investment products are offered through Univest Investments, Inc., a registered broker dealer, Member FINRA and SIPC. Securities products are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of principal amount invested.