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All Pension Forecasting is Local

Attention to pension and budget details, flexible technology support reliable financial forecasts.

GovInvest financial forecasting solutions are designed specifically for state and local governments. For pensions, the Total Liability Calculator is the foundational tool that we customize for every client to reflect important features and nuances that make each pension plan unique. We highlight below a few key factors GovInvest considers to ensure the tool is optimized for each state or local government we serve.

Number of Plans

Governments frequently participate in multiple pension plans because there are often different plans for different types of employees. The most common example of this at the local level is when there’s one plan for general employees and another for public safety employees. This can make it challenging for policymakers and the public to understand the trajectory of a jurisdiction’s pension costs and liabilities overall because each plan produces separate actuarial reports. The Total Liability Calculator gives finance officials the flexibility to project pension costs on a combined basis across all plans while maintaining the ability to analyze specific elements of a single plan.

Single or Multi-Employer

Public pensions can be structured as single employer or multiple employer plans. This is an important distinction because it impacts the amount of control a state or city has over the design of their pension plan. As the name suggests, a single employer plan is one that provides retirement benefits to employees of one governmental entity. On the other hand, multiple employer plans will collect contributions and provide benefits to employees from more than one participating governmental entity and can be structured as either a cost sharing plan or an agent plan. According to the Governmental Accounting Standards Board (GASB):

A  cost-sharing multiple-employer plan is one in which the participating government employers pool their assets and their obligations to provide defined benefit pensions—meaning that plan assets can be used to pay the pensions of the retirees of any participating employer.

By contrast, the assets of the participating government employers in an agent multiple-employer plan are pooled for investment purposes but separate accounts are maintained for each individual employer.

From a contribution perspective this distinction matters because cost sharing plans apply a single contribution rate across all participating employers while agent plans calculate a unique contribution rate for each employer.

These plan structures also suggest different levels of client control over potential plan changes. For example, a single employer plan is generally established through the governing statutes of the associated state or local government who can influence all aspects of the plan structure through subsequent legislative changes. By comparison, large cost sharing plans are often established in state statute, which limits the power of any individual employer to independently alter the plan.

Reserve Funds and Pension Obligation Bonds

In addition to the employer contributions paid directly to the pension system, governments may also set aside funds in a dedicated reserve account that will fund future contributions or make debt service payments related to a previously issued pension obligation bond. Examples of this include the Section 115 Trust that’s in place in Benicia, California and a $40M pension obligation bond issued by Grand Traverse County, Michigan last year. GovInvest works closely with our clients to ensure these payments are captured in the projections so that finance officials and policymakers can see the full budget impacts of pension related expenses under different scenarios.

Dedicated Funding Sources

Pension plans can also receive supplemental payments from a variety of other sources. Some examples of this practice noted by the National Association of State Retirement Administrators (NASRA) include a dedicated sales tax in Jacksonville, FL, a supplemental appropriation from the state budget to Colorado’s pension fund, and a share of corporate income taxes in Louisiana. Working with local budget experts to incorporate these jurisdiction-specific features into the projections further strengthens the results and insights produced by the Total Liability Calculator.


The topics highlighted above illustrate some of the ways GovInvest can tailor the actuarial and budget projection tool to account for jurisdiction-specific circumstances. To be sure, the core actuarial projections and analysis are equally nuanced as it relates to the design of the pension plan. When necessary, things like variable cost of living adjustments, employee contribution risk sharing features, and hybrid plan designs will also be fully reflected in the analysis produced by our team of industry leading, in-house actuaries.

In combination, powerful technology tailored to the specific pension and budget circumstances of a given jurisdiction can provide finance officials with actionable insights and critical analysis needed to effectively manage pension liabilities over the long term.