From the IAFF: The House Ways and Means Subcommittee on Oversight held a hearing May 5 to discuss HR 567, the Public Employee Pension Transparency Act (PEPTA).

PEPTA would require state and local governments to file a report with a new federal bureaucracy at the U.S. Treasury that shows what the financial status of their pension plan would be if the plan invested only in Treasury Bills that pay approximately 4%. If a jurisdiction failed to issue such a report, it would lose the tax-exempt status for its bonds. Losing the tax-exempt status for state or local bonds would prevent jurisdictions from undertaking critical infrastructure projects like building bridges and roads.



Rep. Charles Boustany Jr. (R-La.), chairman of the committee, and Rep. Devin Nunes (R-Calif.), the author of the legislation, argued that the bill is necessary to prevent pension plans from going bankrupt.

But the IAFF has argued that H.R. 567 should be renamed the Public Employee Pension Elimination Act because that is what the bill will ultimately do. Reporting a pension’s financial status based on the Treasury bond rate would dramatically exaggerate the plan’s unfunded liabilities. This would give the false impression that pension plans are going bankrupt and lead to calls to eliminate defined benefit pension plans altogether in favor of 401(k)-style defined contribution plans.