Pensions Resist Accounting Rules That Would Magnify Liability

U.S. public pension systems, facing as much as $3 trillion in unfunded promises to current and future retirees, are resisting proposed new standards that might double their funding deficits.

Investment losses in 2008 and 2009 left state and local pensions with $3.6 trillion in unfunded obligations, according to an October 2010 study by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester. By last month, states had 74.6 percent of assets needed to fulfill obligations, down from 82.8 percent in 2007, according to data compiled by Bloomberg.