Description: Part 2 proposes solutions to the second of three flaws of the current financial model to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: Exploration of sources of volatility in retiree health valuations, noting how volatility arises and might be mitigated, with discussion of valuation parameters more problematic for retiree health benefits than for pensions. Three significant influences on retiree health valuation volatility are covered-- changes in benefit level, fluctuations in cost level, and alterations in eligibility for, or duration of, benefit – and attention focused on the last two. Specific conclusions result in recommendations, which are supported by practical examples contrasting volatile measurement results with those likely from the recommended practices. Theoretical discussion includes health claim variation, health trend usage, financial economics, option pricing, discount rates, and deterministic vs. stochastic modeling.

Description: Defined benefit DB pension plans continue to dominate the retirement landscape for the roughly 20 million state and local government workers in the United States. In most state and local plans, pension benefits are protected by constitutional, statutory, or common law guarantees. In many cases, these guarantees make the benefit promises to participants virtually free of risk. Finance theory is unambiguous that the discount rate used to value future pension obligations should reflect the riskiness of the liabilities.

Description: Part 1 proposes solutions to the first of three flaws of the current financial model to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: The current financial model put forth as the market value of public sector pension benefit liabilities is simply the expected cash flows of the accumulated benefit obligation, as defined for current private sector financial reporting, discounted using a risk-free yield curve. This model is in serious need of an overhaul. This monograph addresses this issue.

Description: Part 4 presents an alternate approach to obtaining the fair value of the public sector employer’s pension benefit liability.

Description: Part 5 addresses various purposes for measuring a public sector pension liability and which measures have the most practical usefulness.

Description: Paper discusses transition considerations if bond-based discount rates are used for funding public pension plans.

Description: Introduction to the paper that documents the flaws of the current financial model.

Description: Paper that discusses a new funding method that would make the recommended contribution for funding purposes for public DB plans subject to an overriding minimum contribution OMC calculation.