The Free Enterprise Nation today announced its support of the Public Employee Pension Transparency Act (“PEPTA”), introduced by U.S. Representatives Devin Nunes (CA), Darrell Issa (CA) and Paul Ryan (WI).
James MacDougald, President and Founder of The Free Enterprise Nation (“FEN”) stated, “PEPTA (HR 567) is extremely important legislation that is in the best interest of both the taxpayer and the public sector employee. It will establish a sorely-needed enforcement mechanism requiring public sector pension funds to disclose their real financial liabilities.”
According to MacDougald, current estimates of state and municipal unfunded pension liabilities range from $500 million to $3 trillion. “If the higher estimate is correct, it is quite possible that some public sector employees might not receive the retirement benefits that they have been promised. For example, the City of Prichard, Alabama filed for Chapter 9 bankruptcy and stopped issuing pension checks to city retirees who relied on them for survival. This unacceptable situation must be prevented in other municipalities and states, and we believe that PEPTA is an important step toward that end,” MacDougald said.
Since the organization’s inception, FEN has studied the perilous financial conditions of many public sector pension plans and believes that the lack of uniform and consistently applied accounting and reporting standards for these plans has masked much of the problem. “In the absence of those standards, neither the taxpayer nor the public employee can be confident that they have a clear picture of a given plan’s solvency and funding status,” according to MacDougald. “Furthermore, the ‘two-edged sword’ of the failure to achieve projected investment returns on pension plan assets combined with decreased state and municipal tax receipts has created a legitimate fiscal crisis for many public sector entities,” MacDougald added.
“Simply put, the Public Employee Pension Transparency Act will require disclosure of public sector pension funding that is consistent with the private sector, will provide the public sector retiree with more accurate information about their promised benefits, and will protect the taxpayer by ensuring more responsible governance of public pension plans,” MacDougald concluded.
