We are painfully aware of the limitless media attention focused on your pensions. It seems to be coming from every media venue in every part of the country covering both large and small markets -- most with negative and misleading information framing your hard-earned retirement benefits as excessive or generous gifts from the local government.
The effects of the recession on profits from pension fund investments have revealed the failure of many local governments to keep up with their required contributions. Many public officials chose to take pension holidays while riding the wave of investment profits and now they and the media are shifting the blame to you. Consequently, the public, who have limited or no understanding of public pension systems are jumping on this band-wagon and pushing for actions that could be detrimental to you, as well as future fire fighters and paramedics. We are putting many resources in place to help you with this fight locally, and you will hear about additional opportunities for resources at the upcoming 2010 Convention. However, I want to inform you of an existing threat to your pension systems that will likely add fuel to the claims of public officials as they attempt to alter your pensions to reduce their liability. This threat comes from changes to pension accounting standards that will be released in the next few months. These changes will alter the way local and state governments account and report liabilities for pension plans. Pension accounting and financial reporting standards are prepared and released by the Governmental Accounting Standards Board (GASB) -- much like fire service standards are prepared and released by NFPA. These standards, though voluntary, are recognized by governments, the accounting industry and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments. Compliance with GASB's standards is enforced through the laws of some individual states and through the audit process when auditors render opinions on the fairness of financial statement presentations in conformity with GAAP. The two GASB standards relevant to pension plan accounting are GASB Statement No. 25 Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and GASB Statement No. 27 Accounting for Pensions by State and Local Governmental Employers. You may view the proposed changes to these standards at the links below. GASB Posts Aids to Understanding Pension PV The GASB issued a Preliminary Views, Pension Accounting and Financial Reporting by Employers. To help readers understand this document and the accompanying plain-language supplement, the GASB has posted a number of materials to its web site, including a video, fact sheet, and a plain-language article. The IAFF has monitored these proposed changes as they were being prepared and have secured the required expertise to submit comments during the public comment period. The comment period deadline is September 17, 2010. Once again, you may view the proposed standard changes and read more about GASB at this link. Pension Accounting and Financial Reporting by Employers
Preliminary Views Plain-Language Supplement (financial statement users; preparers, auditors, and actuaries should respond to the Preliminary Views) I want to personally assure you that we will do everything possible to protect you and the security of your future benefits.
Fraternally,
Harold A. Schaitberger
General President
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