Fitch: Local Government Pension Risk Varies Greatly

Pensions are expected to pose a continued, and in some cases, rising source of budgetary pressure for local governments in general, according to a Fitch Ratings report.

"Pension contributions remain a source of budgetary pressure for local governments that provide defined benefits to retirees, whether provided by their own system or through a statewide plan," said Amy Laskey, Managing Director in Fitch's U.S. Public Finance group. "The level of risk posed by pension liabilities varies enormously among the more than 1,000 local governments Fitch rates. Each government's pension situation is evaluated individually."'

The new GASB standards set to take effect over the next two years are a step in the right direction toward better transparency and comparability of government pension liabilities.

The new GASB standards will provide a more consistent view of pension liabilities to analysts, while also providing additional information to governmental employers to use in decisions about funding and benefit levels going forward.

Fitch does not expect the new GASB standards to result in a significant level of rating changes.

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