Tag: legacy debt
Separating “legacy debt,” changing the discount factor, and improving accounting offers a more rational approach. In an earlier study, my colleague JP Aubry identified the importance of “legacy debt” in public pension plans. This debt arises because many of the retirement systems have been providing benefits since the early 1900s, but the benefits were not…
The brief’s key findings are: The inclusion of “legacy debt” – unfunded liabilities from long ago – with current liabilities impedes effective pension policy. A new approach would separate legacy debt from other unfunded liabilities in order to: spread the legacy cost over multiple generations; and properly identify fixed vs. variable costs. It would also…
