Public Pension Reporting and Disclosure: The Current State of Practice and Examples of What Works Well
Retirement benefits for state and local government employees have undergone considerable changes over the past decade. These changes have included benefit reductions, increased requirements for benefit eligibility, and increased contributions from both employers and employees. Over the same period, pension funds experienced significant losses due to the recession, followed by more recent investment gains.
In the face of these changes, the importance of comprehensive and timely pension reporting continues to increase. This report examines 83 of the country’s largest pension systems to assess (1) how they communicate financial, benefit, and governance information to their members and other interested parties, and (2) which systems provide examples and lessons learned for how to effectively communicate relevant information. Key findings include:
- A majority of systems in the sample follow Government Finance Officers Association reporting standards in producing their comprehensive annual financial reports (CAFRs), with nearly half of the sample also developing a plain-language annual financial report;
- Virtually all of the systems develop an actuarial valuation (annually), an experience study (at an average of every five years), and have a funding policy produced by the system and/or established in state statute;
- Almost all of the systems disclose investment fees and offer such information online;
- All of the systems compare the performance of each major asset class to a relevant benchmark, and nearly every system offers information on benchmark comparisons online, in its CAFR, or both;
- A significant commonality among systems with robust communications and reporting initiatives is active engagement with key stakeholders; and
- Leveraging social media and/or establishing advisory committees has helped systems garner detailed feedback from their stakeholders.