National Conference on Public Employee Retirement Systems

The Voice for Public Pensions

NCPERS Research Series on GASB 45 Available

February 22, 2008

NCPERS has published a new NCPERS Research Series report. The study of state and local retirement system efforts on retiree healthcare was performed by Gallagher Benefit Services, Inc in order to understand how NCPERS members were dealing with GASB 45, which establishes uniform financial reporting and accounting standards for state and local governmental entities related to post-employment benefits other than pensions (OPEB).

According to the survey, nearly two-thirds of the participating entities have already completed their initial GASB valuations, while another 23.9 percent were in the process of having their obligations valued. Only 9.9 percent had not yet begun the valuation process.

Liabilities vary widely among entities, depending upon the plan design, retiree contribution levels, and the employer''s demographics. Respondents were large employers, and that is reflected in their obligations: 28.8 percent of respondents had OPEB liabilities exceeding $500 million, while 15.1 percent had liabilities of less than $50 million.

While GASB 45 does not require a funding methodology for entities with OPEB liabilities, some plans have already determined how they plan to meet their obligations. Nearly seven percent of surveyed entities expect to partially or fully fund the actuarial accrued liability (AAL); 11 percent plan to fully fund the actuarially required contribution (ARC); 19.2 percent will partially fund the ARC; and 21.9 percent plan to continue paying for the obligations on a pay-as-you-go basis. More than 50 percent of respondents have yet to determine how they will pay their OPEB obligations going forward.

Lastly, in response to GASB 45, plan sponsors may consider changes to eligibility for retiree benefits (age and service requirements), benefit design, and how much retirees are required to pay for coverage.


To view the full report in PDF format, please click here.