State and local governments

Question

Quizplus · Accepted Answer

State and local governments often use a discount rate that is higher than the appropriate rate for calculating the present value of their pension liabilities. This results in an understatement of the actual cost of pensions for future retirees. This is because a higher discount rate reduces the present value of future pension obligations, making the pension liability appear smaller than it actually is. As a result, state and local governments may not be accurately accounting for their pension liabilities.

State and Local Governments