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Failure of new pension accounting standards show in Chicago funds

Aug 10, 2016

The public pension world mostly cheered the arrival of new pension reporting standards from GASB — the Governmental Accounting Standards Board. A meaningful step towards more realistic reporting on pension deficits seemed here.

In particular, a central problem has been that pensions typically assume very high rates of return on investments they hold, which have been widely criticized as unrealistic. That number has a massive impact on the reported health of pensions, so overly optimistic return assumptions have hidden the severity of the public pension crisis. Forcing actuaries and accountants to use a lower return was widely seen as the…

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