1st Edition

State and Local Pension Fund Management

By Jun Peng Copyright 2008
    286 Pages 8 B/W Illustrations
    by Routledge

    Intense media coverage of the public pension funding crisis continues to fuel heightened awareness in and debate over public pension benefits. With over $3 trillion in assets currently under management, the ramifications of poor oversight are severe. It is important that practitioners, researchers, and taxpayers be well-advised regarding any concerns, but until now traditional references have provided very little coverage.

    State and Local Pension Fund Management provides a basic and systematic discussion of all the major issues facing those responsible for state and local public retirement programs. The author begins with a technical overview that examines the history of the public pension system. He then proceeds to examinations of pension benefit design, actuarial valuation and funding methods, financial reporting, and pension asset investment management.

    These technical discussions prepare readers for the second component, which is a focus on policy. The book delves into issues such as managing public pension programs in the political context of public budgeting, pension benefit reforms, and the fairness and sustainability of pension benefits in the public sector. In addition, the author dedicates a chapter to a detailed discussion of other postemployment benefits (OPEBs) such as life, disability, and long-term care insurance, as well as healthcare subsidies. The book concludes by exploring the dilemma over how to ensure financial security for public employees in their retirement without putting additional pressure on state and local government finance.

    By understanding the major issues involved in managing retirement benefit programs in the public sector, readers will gain the knowledge needed to make informed decisions regarding specific fund management.  They will also be better able to participate in the debate over the larger issues regarding pension fund policy and reform measures.

     

    Overview
    Retirement Benefits
    Examining the State and Local Pension Plan Management
    A Brief History of State and Local Public Pension Plans
    Public and Private Sector Pension Benefits
    State and Local Pension Systems
    Growth of Public Pension System Assets
    Overview
    Pension Benefit Design
    Regular Service-Related Benefits
    Ancillary Benefits
    Deferred Retirement Option Plan (DROP) Program
    Adequacy of Public Pension Benefits
    Actuarial Valuation and Financial Reporting
    Assumptions
    Actuarial Cost Methods
    Asset Valuation
    Financial Reporting and Accounting Standards
    Governing Public Pension Plans
    ERISA
    Public Pension Benefit Protection
    Public Pension Plan Administration
    Public Pension Plan Oversight
    Investment Management
    Overall Objective of Investment Management
    Portfolio Diversification
    Investment Policy
    Implementation Strategy
    Pension Plan Management and the
    Operating Budget
    Underfunded Pension Plans
    Overfunded Pension Plan
    Case Studies
    Pension Contribution Stabilization Methods
    Defined Contribution Pension Plan
    Defined Benefit (DB) Plan
    Defined Contribution (DC) Plan
    Public Sector Defined Contribution Plan Experience
    Cash Balance Plan
    Defined Contribution Plan Design Issues
    Conclusion
    Other Postemployment Benefits
    Healthcare for Retirees
    GASB Statements 43 and 45
    Dealing with OPEB Liability
    Looking Forward
    Managing Pension Liability Growth
    Managing Pension Asset Growth
    Changing Pension Benefit Design
    Conclusion
    To view the complete Table of Contents, please visit the CRC Press website.

    Biography

    Jun Peng (University of Arizona, Tucson, USA) (Author)

    The current economic recession due to the collapse of major financial institutions is having a devastating effect in both the public and private sectors on pension funds. Just one example is the potential havoc to hundreds of thousands of pensions for active and retired auto industry workers with respect to the near bankruptcy of General Motors, Ford, and Chrysler. The newest addition to the outstanding CRC Press series of 147 volumes on Public Administration and Public Policy and as a part of their Comprehensive Public Education publishing program, State and Local Pension Fund Management by Jun Peng (Associate Professor, School of Public Administration and Policy, Eller college of Management, University of Arizona) is a detailed, comprehensive, academically impressive, yet thoroughly accessible introduction to every aspect of pension fund management beginning with an historical overview, then providing chapters on pension benefit design elements, actuarial valuation and financial reporting, pension plan governance standards and oversight policies, management issues for investing pension funds, and pension fund management planning and operational budgets. Of special note are the chapters on post-employment benefits with respect to pension plans (including healthcare for retirees), and the 'Defined Contribution Pension Plan'. Concluding with addressing such issues as managing the growth of liabilities and assets, as well as changing pension benefit designs, "State and Local Pension Fund Management" is a complete course of study in a single volume, and a critically important addition to corporate, governmental agency, and academic library Economics Studies reference collections in general and Pension Plan Management reading lists in particular.

    --Library Bookwatch