By Steve Metz
Government pension plans have been in the news a great deal the past few years and it hasn’t been pretty – due in large part to poor investment performance these public plan costs have skyrocketed along with their unfunded liabilities. Governments all over the country have been hit hard with huge increases in legally required pension contributions that are devastating their budgets. New accounting rules coming soon will bring even more attention to these issues.
Before we go too much further, it is important to note that determining the value of pension plan unfunded liabilities is an inexact science. For example, the magnitude of the liabilities is extremely sensitive to certain assumptions such as future investment returns,…