Public Pension and Retirement Plans:
The Fair Value Process

Public Pension and Retirement plans operate under the rules promulgated by the Government Accounting Standards Board (GASB). Trustees are required to report fair values for the assets in their plans. However, GASB has not yet defined the fair value process for the assets held by public plans, nor has it adopted the FAS 157 hierarchy and process. GASB is reviewing these issues along with the matter of reporting the fair value of their pension liabilities. FAS 157

Given that many public pension plans have invested in the types of securities classified by FAS 157 as Level 2 and Level 3 assets, we expect that GASB will in the near future adopt a similar fair value hierarchy and process to FAS 157. GASB has already issued standards relating to fair value of derivatives and intangible assets that are generally in accordance with FASB.

For Public Plan Trustees anticipating these likely changes in GASB to establish a transparent and well-documented process to ensure that fair values are determined for all Plan assets, we recommend a useful information source. The Employment Benefit Quality Center of the American Institute of Certified Public Accountants (AICPA) has prepared a number of useful guides to Plan Trustees on the FAS 157 requirements and expectations. Please click here to view or download these AICPA documents, which we have organized for Trustee convenience.