New accounting rules to expose pension funding gaps

State and local governments will no longer be able to fudge the numbers on their underfunded pensions for workers. Moody's will issue new guidelines to force governments to report their pension obligations more honestly. Washington Post: For the worst-off cities, the new pension debt calculations could mean bond rating downgrades and increased borrowing costs when localities try to raise money for new projects, Moody's has warned. The accounting changes themselves will not force policymakers to alter how they fund pensions. But finance experts say that by simply highlighting greater funding gaps, the rules will intensify pressure on state and local governments to allocate more of taxpayers' dollars to their pension funds. More likely, public workers may have to contribute more to their retirements or see promised benefits curtailed, measures that have already been implemented in more than 40 states. Virginia and Maryland have cut benefits for new hires while preserving...(Read Full Post)