TY  - JOUR
AU  - Ponds,Eduard
AU  - Severinson,Clara
AU  - Yermo,Juan
TI  - Funding in Public Sector Pension Plans - International Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17082
PY  - 2011
Y2  - May 2011
UR  - http://www.nber.org/papers/w17082
L1  - http://www.nber.org/papers/w17082.pdf
N1  - Author contact info:
Eduard Ponds
Tilburg University
Economics of Collective Pension Plans
The Netherlands
E-Mail: eduard.ponds@apg-am.nl

Clara Severinson
OECD Financial Affairs Division
2 Rue André Pascal
75016 Paris FRANCE
E-Mail: Clara.SEVERINSON@oecd.org

Juan Yermo
OECD
Directorate For Financial and Enterprise Affaires
2, rue André Pascal
75016 Paris
E-Mail: Juan.YERMO@oecd.org
M3  - presented at "State and Local Pensions Conference", August 19-20, 2010
AB  - Most countries have separate pension plan for public sector employees. The future fiscal burden of these plans can be substantial as the government usually is the largest employer, pension promises in the public sector tend to be relatively generous, and future payments have to be paid out directly from government revenues (pay-as-you-go) or by funded plans (pension funds) which tend to be underfunded. The valuation and disclosure of these promises in some countries lacks transparency, which may be hiding potentially huge fiscal liabilities that are being passed on to future generations of workers.

In order to arrive at a fair comparison between countries regarding the fiscal burden of their DB public sector pension plans, this paper gathers more evidence on public sector pension plans regarding the type of pension promise and quantifies the future tax burden related to these pension promises. The reported liabilities are recalculated using both a fair value approach (local market discount rates) and a common, fixed discount rate across all countries which reflects projected growth in national income. We also estimate for a number of plans from a sample of OECD countries the size of the net unfunded liabilities in fair value terms as of the end of 2008. This fiscal burden can also be interpreted as the implicit pension debt in fair value terms.
ER  -