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Pension underfunding in the Australian public sector: a generational accounting perspective

Research output: Working paper

Publication date1998
Place of PublicationLancaster University
PublisherThe Department of Accounting and Finance
<mark>Original language</mark>English

Publication series

NameAccounting and Finance Working Paper Series


We examine the financial dimensions and accounting implications of pension under-funding in the Australian public sector. A generational-based accounting perspective provides important insights to explain why public sector funds are under-funded. We project the burden of under-funded government employer pension obligations to three generational cohorts of public sector employees, based on a data set describing flow of funding characteristics of 10 federal, state and local Australian government funds in the early 1990s. We find wide variations in interperiod inequity across various levels of Australian government in our sample. Employer contributions required to bring pension funds into generational balance is an important determinant of cross-sectional variations in pension under-funding practices across the sample, after controlling for other variables used in prior studies.