Many government employers seem to be hazy about how they will cope with new rules for managing retiree health benefit obligations.
Consultants in the consulting arm of Aon Corp., Chicago, come to that conclusion in a summary of results from an informal survey of 118 city, state and county employers that will be affected by new Government Accounting Standards Board rules.
In the past, most government employers used a "pay as you go" approach to funding retiree health benefits.
Now, government employers are supposed to include estimates of non-pension retirement benefit obligations as expenses in annual statements.
Government employers that use formal investment instruments or other formal arrangements to fund retiree health costs can use a lower discount rate when coming up with retiree health obligation estimates, Aon consultants say.
The new standards began applying to government employers with more than $100 million in annual revenue Dec. 15, 2006.