Nobody's happy, everybody wins? This month's issue of GP is all about the rising tensions between government, pension trustees and employees.
In the sea-change about to hit Norway’s municipal pension system. Come January 1, the country’s government will do away with a set retirement age and instead will allow employees to draw a pension at age 62, but continue working for another 13 years.
That, among other changes, will have a ripple effect on companies if a mass of employees retire at 62, five years earlier than the existing rules allow. (Click here to read article)
Meanwhile, in Spain and France, workers are up in arms and in some cases striking over their governments’ proposed plans to increase the pension age as they try to tackle gaping deficits. (Click here to read article).
However, it’s not clear that any amount of picketing can prevent the inevitable.
US employees shouldn’t rest easy, either. One topic of conversation at the Pensions Bridge Annual conference in San Francisco last month was the changes proposed by the Governmental Accounting Standards Board (GASB) that would force states and local governments to place their pension liabilities on their balance sheets. States currently only disclose their pension contributions.
These changes have been in the works for some time, but if implemented, government employees can expect benefit cuts as the multi-billion dollar liabilities come under even greater scrutiny. Politicians will be groaning at the need to take the unpopular step of tampering with pension benefits.
GASB’s proposals, in essence, treat government plans more like corporate plans, which have been moving towards de-risking their schemes through liability driven investment (LDI) strategies in part because of accounting rules that place their deficits on their balance sheets.
The GASB proposals could finally move LDI, long the purview of corporate pension funds, on to the government arena.
Raquel Pichardo-Allison, Editor
