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- Title
Impact of Unfunded Pension Obligations on Credit Quality of State Governments.
- Authors
MARTELL, CHRISTINE R.; KIOKO, SHARON N.; MOLDOGAZIEV, TIMA
- Abstract
This study reviews the funding status of state-administered pension plans and their impact on state credit quality. As the fund ratio (actuarial assets/actuarial accrued liability) of state-administered pension plans decreases, states are more likely assigned a lower rating. Moreover, rating outlooks are sensitive to the fund ratio, especially for migration between stable and negative outlooks for states with lower fund ratios. These results are a timely pretest to the 2013/2014 implementation of GASB Statements No. 67 and 68, serving as a benchmark to assess whether new reporting requirements will yield information to alter the market's response to unfunded pension liabilities.
- Subjects
UNDERFUNDED pension plans; EMPLOYEE benefit laws; RETIREMENT benefits; RETIREES; TAXPAYER compliance
- Publication
Public Budgeting & Finance, 2013, Vol 33, Issue 3, p24
- ISSN
0275-1100
- Publication type
Article
- DOI
10.1111/j.1540-5850.2013.12013.x