The Municipal Securities Rulemaking Board is holding a meeting March 22 with federal regulators, congressional groups, lawmakers and market participants to discuss changes affecting public pension obligations and other post-retirement benefits, including plan redesigns, differing accounting and valuation methods, and legal issues.
The board invited roughly 45 organizations to attend the meeting, including officials from the Securities and Exchange Commission, the Treasury Department, Internal Revenue Service, the Financial Industry Regulatory Authority, the Commodity Futures Trading Commission, the Congressional Budget Office and the Congressional Research Service.
Also invited were lawmakers, state and local groups, retirement groups, unions and others.
The invitation, obtained by The Bond Buyer, which was dated Feb. 25 and signed by MSRB executive director Lynnette Kelly, said "pension financing and retirement readiness is of national concern."
Asked to comment about the meeting, Kelly told The Bond Buyer, "The MSRB acts as a resource to policymakers and others, and periodically provides a forum to discuss municipal market issues of interest to multiple stakeholders."
The board pointed out that public pension plans hold more than $3 trillion in assets and are a major financial player in the markets.
There are thousands of state and local pension and other post-employment benefit plans covering nearly 20 million employees and over 8 million retirees and survivors, it said. Many of these benefits are guaranteed by state law or contracts and, ultimately, state and local taxpayers are liable for them.
"To the extent there might be any systemic risks or there might be provisions that impose responsibilities on federal agencies or policymakers, we thought it might be useful to invite those with experience, knowledge and responsibility to share such," the board said in its invitation letter.
The MSRB noted that the Dodd-Frank Act broadened its mission to include the protection of municipal entities such as issuers and borrowers, in addition to investors and the public interest.
The board said the risks of insufficient funding of pension plans are difficult to measure. State and local governments and other policy makers need confidence in the way pensions and other post-retirement benefits are measured in order to understand future financial implications, it said.
"The meeting is intended to provide perspectives and to give participants an opportunity to discuss the state and local pension and post-employment benefit situation; to identify areas of mutual interest; and, potentially, to find areas where efforts can be coordinated," the MSRB told invitees.
The board said meeting will focus on: redesigns of plans in recent years in the wake of the recession; rising legal challenges for pension plans in federal and state courts; the emerging set of divergent accounting and valuation calculations and their implications; and the important differences with public post-retirement benefit plans.
The meeting, to be held at the MSRB's headquarters in Alexandria, Va., comes as groups like the Government Finance Officers Association prepare members for changes to the Governmental Accounting Standards Board's pension reporting guidelines. GASB recently stopped requiring employers to calculate and disclose actuarially required contributions (ARC) in reports, and eliminated standards for calculating ARCs.
GFOA responded by issued a pension funding best practices paper in late February that recommends state and local governments with defined-benefit plans formally adopt a funding policy to ensure benefit costs are adequately funded.
The group also recommended governments have contributions determined by actuaries at least every two years, and that contributions be based on those determinations. Contributions should fully fund the long-term costs of promised benefits, be relatively stable and allocate costs over employees' period of active service, GFOA told members.
GFOA's best practices evolved out of pension funding guidelines the group developed last year in concert with 10 other groups representing state and local governments, retirement systems and government employees.
GFOA and GASB are among organizations invited to the event.
Others groups include the National Association of Counties, National Association of State Auditors Comptrollers and Treasurers, National Governors Association, National League of Cities and the United States Conference of Mayors.
Some lawmakers were invited, such as Reps. Steve Stivers, R-Ohio, and Gwen Moore, D-Wis., both members of the House Financial Services Committee.
Also invited are law firms Williams & Jensen PLLC, whose clients include the National Conference on Public Employee Retirement Systems and the Houston Firefighters' Relief & Retirement Fund, and Hogan Lovells US LLP, the law firm that employs attorney Scott Lilienthal, president of the National Association of Bond Lawyers.
