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NTU Supports Pension Transparency Legislation
A Letter to Representative Devin Nunes
December 2, 2010
Honorable Devin Nunes
Dear Representative Nunes:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write to offer our support for your legislation to provide a much-needed dose of financial transparency for state and local government employee pension plans.
Pension shortfalls, whose fundamental causes predate the slumping economy, are leaving many states strapped for cash and questioning how best to remedy the problem. Reports show unfunded liabilities in all fifty states totaling anywhere between $1 trillion and $3 trillion. Much of the unpredictability of pension budgets can be attributed to obscure government accounting rules, particularly relating to valuation of plan assets and liabilities. With few real disclosure requirements, states are at even further risk of not only jeopardizing retirement packages for active and retired employees, but also putting taxpayers in grave danger.
Your legislation would implement sensible, vital reporting mandates for faltering retirement systems whose administrators must learn to confront reality. More specifically, your bill would require state and local government employee pension plans to file annual reports that include the following: a schedule of funding status; a schedule of contributions by the plan sponsor; a projection of annual contributions, fair market value of assets and liabilities, and funding percentage; actuarial assumptions and an accurate number of participants; investment returns; and the manner in which they intend to decrease unfunded liabilities. Additionally, your legislation would compel the Secretary of Treasury to publicly disclose all of this information once received. All told, your bill discourages a federal taxpayer-subsidized bailout of state and local pension plans, which we believe would yield severe consequences in an already dismal economic climate.
We commend your efforts to increase accountability within state and local government employee pension plans, both to beneficiaries and taxpayers. For their sake, we look forward to helping you enact this critical legislation as quickly as possible.