Pension plans defer compensation from working years to retirement years. There are two major types of pension plans. A defined benefit plan specifies a formula for computing benefits payable at retirement based on age, length of plan participation, and earnings history. A defined contribution plan provides a framework within which the employer and/or employees contribute to individual worker accounts. The balance in this account at retirement, reflecting contributions plus investment income, constitutes the source of retirement benefits from a defined contribution plan. Put simply, a defined benefit plan specifies benefits, and a defined contribution plan specifies contributions. The Employee Retirement Income Security Act (ERISA) of 1974 requires annual financial and actuarial reporting by most private pension plans. Public Law 95-595, 31 U.S.C. 9501-9504, enacted on November 4, 1978, extended financial and actuarial reporting requirements to federal government pension plans. The Comptroller General and the Office of Management and Budget (OMB) jointly prescribe the form and content of the annual pension plan reports under Public Law 95-595. The reports are due 210 days after the last day of each plan’s fiscal year and are to be sent to the Congress and the General Accounting Office. Public Law 95-595 defines the term “government pension plan” to mean a pension, annuity, retirement, or similar plan established or maintained by an agency for any of its officers or employees, regardless of the number of participants. The plans subject to Public Law 95-595 fall into three general categories: agency plans, nonappropriated fund activity plans, and federal reserve and farm credit plans. Agency plans cover employees of executive, legislative, and judicial organizations that are generally recognized as agencies and are generally funded by annual appropriations. Nonappropriated fund activity plans cover employees of organizations, such as post exchanges and commissaries, that provide morale, welfare, and recreation services to military components. In large part, these organizations are designed to be self-sufficient and operate with revenues generated from their activities. Finally, the federal reserve and farm credit plans cover employees of federal reserve and farm credit system entities, which also operate with revenues generated from their activities. The agencies, nonappropriated fund activities, and federal reserve and farm credit entities offer 34 defined benefit pension plans, which cover more than 10 million current employees, separated employees entitled to benefits, and retirees. Fifteen of the 34 defined benefit plans are agency plans. Nonappropriated fund activities and federal reserve and farm credit entities operate the other 19. Specifically, nonappropriated fund activities have 8 defined benefit plans for civilian employees who provide services to the Army, Navy, Air Force, Marines, and Coast Guard; the Federal Reserve System has a defined benefit plan for employees of the federal reserve banks and the Board of Governors; and the Farm Credit Systemhas 10 defined benefit plans for employees of the various district banks. Approximately 5.8 million active employees participate in the 34 federal government defined benefit plans. In addition, the plans provide benefits to 4.1 million annuitants, and another 119,000 separated employees are entitled to deferred retirement benefits. The defined benefit plans range in number of participants from the Civil Service Retirement and Disability Fund (CSRDF), with 5.2 million participants, to several plans which have fewer than 25 participants. Participants in the two largest plans, CSRDF and the Military Retirement System, constitute 97 percent of participants in the 34 federal defined benefit plans. CSRDF consists of the Civil Service Retirement System (CSRS) and the Federal Employees’ Retirement System (FERS). The Congress closed CSRS to new participants at the end of 1983, and employees hired since 1983 generally are covered by FERS. Appendix III, table 1, lists the number of participants for each of the defined benefit plans. The federal government also offers defined contribution plans, generally to supplement the deferred compensation employees earn under defined benefit plans. According to the most recent pension plan filings, 2.2 million individuals participate in 17 defined contribution plans sponsored by agencies, nonappropriated fund activities, and federal reserve and farm credit entities. The largest federal defined contribution plan is the Thrift Savings Plan, which has 2.1 million participants, or 97 percent of the participants enrolled in federal government defined contribution plans. Appendix III, table 5, lists the number of participants for each of the defined contribution plans. The vast majority of defined benefit plans sponsored by the federal government offer retirement, survivor, and disability benefits to their participants. As of the most recent plan filings, participants in the 34 defined benefit plans had accumulated more than $1.2 trillion in total retirement benefits, the vast majority in the 15 agency plans. The various federal government plans provide significantly different retirement benefits to their members, depending on factors such as age and salary at retirement, years of service, election of survivor annuities, and cost-of-living adjustments. In addition, some defined benefit plans are supplemented with defined contribution plans and Social Security benefits, and others are not. Certain defined benefit plans provide different levels of benefits for different employee groups. A general description of basic retirement benefits for each of the federal defined benefit plans is provided in the plan profiles in appendix I. These descriptions provide general information only and do not include details for determining or comparing actual benefit amounts. Actual benefit amounts for individual defined benefit plan participants may differ significantly as a result of early retirement, disability benefits, survivor benefit elections, and other factors applicable to specific circumstances. The majority of federal government defined contribution plans provide employer matches to employee contributions. Contribution percentages for each of the defined contribution plans are listed in the plan profiles in appendix II and are summarized in appendix III, table 5. Differences exist in the funding of federal government defined benefit plans. Of these 34 plans, 28 use trust funds, while 6 of the agency plans are referred to as pay-as-you-go plans. Trust funds are separate accounting entities established to account for government and employee contributions, investments, and benefits paid. The pay-as-you-go plans do not have trust funds to accumulate assets to pay plan benefits. For these six plans, benefits are paid to annuitants from appropriations in the year in which the benefits are due. Trust funds for agency defined benefit plans, with the exception of the Tennessee Valley Authority (TVA), invest in special issue Treasury securities, which are nonmarketable. The primary purpose of the trust funds is not to provide a source of cash for the government to pay benefits, but to provide budget authority to allow the Treasury to disburse monthly annuity checks without annual appropriations. Because these securities represent assets of the trust funds and offsetting liabilities of the Treasury, under accounting procedures, the trust fund assets are eliminated in the governmentwide financial statements. Accordingly, these trust fund assets are not included in the governmentwide financial statements, which include the federal government’s $1.2 trillion liability for the benefit obligations of the 15 agency plans. The defined benefit plans of the nonappropriated fund activities and federal reserve and farm credit entities, as well as TVA, use trust funds to set aside money or marketable assets during employees’ working years for the accruing cost of their retirement benefits. A defined benefit pension plan’s status as fully funded or underfunded is determined by comparing its net assets to the actuarial present value of its benefit obligations. The agency defined benefit plans generally are underfunded—that is, the present value of benefit obligations exceeds plan assets. As discussed more fully in the retirement system financing section below, statutory provisions are in place for the future elimination of the unfunded benefit obligations of CSRS and the Military Retirement System. A principal effect of not fully funding most agency pension plans is that agencies’ budgets have not included the full cost of the pensions. Because contributions to most agency plans, under applicable requirements, have covered less than the full accruing cost of retirement benefits to covered employees, the agencies’ budgets have not reflected the full cost of government programs. The defined benefit plans of the nonappropriated fund activities and the federal reserve and farm credit entities, as well as TVA, have generally contributed amounts sufficient to set aside money or marketable assets in trust funds to fully fund their estimated accumulated benefit obligations. One measure of a defined benefit pension plan’s obligation for benefits is represented by the present value of accrued benefits. This actuarial measure is referred to as the Accumulated Benefit Obligation. It applies to private sector defined benefit plans in accordance with Statement of Financial Accounting Standards No. 35 and also was used in the federal government’s prototype governmentwide financial statements for fiscal year 1993. It reflects all accrued benefits due under the plan as if the entity ceased as a going concern. The Accumulated Benefit Obligation is a “static” measure because it does not consider anticipated pay increases, cost-of-living adjustments, or future contributions. Another measure of benefit obligations is represented by the present value of future benefits, net of the present value of future normal cost contributions. This actuarial measure is referred to as the Actuarial Accrued Liability. It is a “dynamic” measure because it considers estimated future service and salary changes, as well as the present value of future normal cost contributions. The Federal Accounting Standards Advisory Board issued an exposure draft entitled Accounting for Liabilities of the Federal Government (November 7, 1994). Its provisions would require that the Actuarial Accrued Liability of federal government defined benefit plans be reflected in federal government financial statements. For the most recent plan filings, 21 of the 34 federal government defined benefit plans—3 of the 15 agency plans and 18 of the 19 plans sponsored by the nonappropriated fund activities and federal reserve and farm credit entities—were fully funded under the static Accumulated Benefit Obligation measure. Those filings also indicate that 15 of the 34 plans—5 agency plans and 10 others—were fully funded under the dynamic Actuarial Accrued Liability measure. Of the largest federal pension programs, FERS is fully funded under the Accumulated Benefit Obligation measure and nearly fully funded under the Actuarial Accrued Liability measure, and statutory provisions for the future elimination of the unfunded benefit obligations of CSRS and the Military Retirement System have already been enacted. Under current law, the government will amortize its unfunded actuarial accrued liabilities by increasing the amount of special issue government securities issued by the Treasury to the trust funds. (See footnote 5.) The special issue Treasury securities represent that portion of estimated future retirement benefit obligations of the agency defined benefit plans that the government has recognized on paper by providing budget authority to cover future benefit payments. The unfunded obligation of an agency plan is that portion of estimated future benefit obligations that has no paper backing in the form of special issue Treasury securities. Therefore, because special issue Treasury securities are used, whether the obligation is funded or unfunded has no effect on current budget outlays. Also, the obligation is not a measure of the government’s ability to pay retirement benefits in the future. The Treasury must obtain the necessary money through tax receipts or borrowing to pay plan benefits to annuitants when those benefits are due for plans having trust funds invested in special issue Treasury securities and for pay-as-you-go plans. This financing approach enables the federal government to defer obtaining the money until it is needed to pay the benefits. Appendix III, table 3, lists the Accumulated Benefit Obligation for each defined benefit plan. Appendix III, table 4, lists the Actuarial Accrued Liability, and the plan profiles in appendix I describe the applicable provisions for eliminating unfunded benefit obligations. By definition, because defined contribution plans do not specify the retirement benefits an individual will receive, their obligation to pay benefits is limited to the contributions made by or on behalf of each individual and any earnings on those contributions. The 15 federal agency defined benefit plans have a total of $464 billion in investments, the vast majority of which are required by law to be invested in U.S. government obligations. These investments consist primarily of nonmarketable special issue U.S. Treasury securities, as described in the preceding sections. The defined benefit plans of the nonappropriated fund activities and federal reserve and farm credit entities reported that they are not restricted to investments in government obligations. The plans of these 19 entities have a combined investment portfolio of $7 billion, of which 88 percent is invested in assets other than U.S. government obligations. The investments consist primarily of corporate stocks and bonds. Appendix III, table 2, lists the investments of each defined benefit plan. Assets in the 17 federal government defined contribution plans are primarily invested in various marketable stock, bond, and government security funds. Investments in these 17 plans totaled more than $28 billion as of the latest plan filings, of which $26 billion was held by the Thrift Savings Plan. The Thrift Savings Plan invests employee designated contributions to the plan’s government securities fund in special issue Treasury securities. Under this financing approach, which is used for the agency defined benefit plans as described in the preceding section, the Treasury must obtain the necessary money through tax receipts or borrowing to pay plan benefits when those benefits are due. However, for the Thrift Savings Plan, budget outlays are recorded for employer and employee contributions as they are made each pay period. Outlays are recorded because the Thrift Savings Plan is not included in the U.S. budget, unlike agency defined benefit plans. Appendix III, table 5, lists the total investment balance for each federal government defined contribution plan. To summarize information on pension plans of the federal government, we reviewed the most recent filings by 51 federal pension plans under Public Law 95-595 received as of the end of our fieldwork, July 21, 1995, including several small plans which had not previously filed. In addition, we contacted the plan administrators to obtain additional plan data pertaining to Social Security coverage, investment restrictions, and financial statement audits. Under Public Law 95-595, the plan filings are not due until 210 days after the plan’s fiscal year-end. Therefore, the most recent plan filing available for most plans was the plan year ending in 1993. Accordingly, legislative initiatives or other subsequent events not included in the information received through July 21, 1995, are not reflected in this report or accompanying appendixes. Also, we consulted with OMB to verify that it had not received filings for additional federal government pension plans. Finally, certain federal benefit programs are excluded from this report because they are not subject to the disclosure requirements of Public Law 95-595. The Central Intelligence Agency pension plan, as well as Social Security and Railroad Retirement benefits, are excluded from the requirements of Public Law 95-595. In addition, the monetary allowance provided to former Presidents is not covered. The Department of Veterans Affairs does not file reports under Public Law 95-595 for its Veterans Compensation and Pension Programs. Veterans and their dependents receive compensation benefits for service connected disabilities or death and pension benefits for nonservice connected disabilities or death. Neither the entitlement to nor the amount of compensation and pension benefits is based on age and length of service. Rather, compensation and pension benefits are based on the occurrence of specified events. In addition, benefits for nonservice connected disabilities or death are subject to specific income limitations. Thus, the Compensation and Pension Programs differ significantly from the defined benefit plans for which reports are filed under Public Law 95-595. Several limitations exist in the summary information presented in the report. The summary of pension plan data is a compilation we prepared from the plan reports and additional plan data provided by the plan administrators. We did not independently verify the information in the plan reports and additional data that the plan administrators provided to us and we do not assure their accuracy on matters of fact or law. Except where indicated in the pension plan profiles in appendixes I and II, the plan financial reports were not audited by independent auditors. In addition, where plans had multiple retirement provisions for certain specialized employees, we listed the retirement benefits provided to the majority of the plan participants. The projections in the plan profiles and tables are highly dependent on the actuarial cost method and the actuarial assumptions used. Several acceptable actuarial cost methods exist. The actuarial assumptions vary by plan because they are based on the best estimate of anticipated experience under the plan made by each plan actuary. These assumptions can have a significant impact on estimates of future costs. In addition, we found that the information provided by plan administrators often varied in the extent of details presented. For example, some plan filings described all significant economic assumptions used in the actuarial valuations, but others provided fewer details about the assumptions. In some cases, because some plans provided more extensive information than others, it might appear that such information was not applicable to the plans which provided less information. That is not always the case. For example, the provisions of the Military Retirement System are substantially the same as those of the separate Coast Guard Military Retirement System, Public Health Service Commissioned Corps Retirement System, and the National Oceanic and Atmospheric Corps Retirement System. Because the administrators of each plan described some provisions of the plan differently, the fact that the provisions are actually the same may not always be apparent. Similarly, the extent of financial and cost information provided by the plans varied. For example, the Retirement Annuity Plan for Employees of the Army and Air Force Exchange (Exchange Service plan) provides substantially the same benefits as the Civil Service Retirement System, except that Exchange Service plan benefits are reduced by a “Social Security offset.” The normal cost reported for the CSRS is 25.14 percent of salary, whereas the Exchange Service plan reported normal cost of 9.81 percent of salary. Part of the difference in normal cost may be caused by differing economic assumptions used by the plans’ actuaries, but the primary reason for the difference is that employees in the Exchange Service plan are also covered by Social Security while CSRS employees are not. Thus, the offset provision cuts plan benefits and reduces plan costs accordingly. However, in order to compare the total costs of all benefits provided to participants covered by these two programs, additional details would be needed. For example, an erroneous conclusion might result unless the costs of providing Social Security benefits to Exchange Service employees were added to the reported plan costs; similarly, detailed information about the Social Security benefits to Exchange Service employees would be required in order to compare the benefits under these programs. The scope of this report did not include analyzing and comparing the provisions of the various plans. However, we have been asked by the Chairman of the Senate Committee on Governmental Affairs to compare, in detail, the provisions of retirement programs for federal personnel. We will provide each of you a copy of the report on the results of that work when it is completed. We conducted our review from April 1995 through August 1995 in accordance with generally accepted government auditing standards. We requested comments on drafts of each plan profile from the applicable plan officials. We incorporated those comments in the plan profiles as appropriate. As agreed with your office, unless you announce its contents earlier, we plan no further distribution of this report until 30 days after its issue date. At that time, we will send copies of this report to the Director of the Office of Management and Budget and interested congressional committees. Copies will be made available to others on request. If you or your staffs have any questions concerning this report, please contact me at (202) 512-9406 or H. Kent Bowden, Assistant Director, at (202) 512-5270. Major contributors to this report are listed in appendix IV. Civil Service Retirement and Disability Fund (CSRS and FERS) Coast Guard Military Retirement System Foreign Service Retirement and Disability Fund Public Health Service Commissioned Corps Retirement System National Oceanic and Atmospheric Administration Corps Retirement System Comptrollers’ General Retirement Plan Court of Federal Claims Judges’ Retirement System U.S. Court of Veterans Appeals Judges’ Retirement Plan Judicial Officers’ Retirement Fund Judicial Survivors’ Annuities System United States Tax Court Retirement Plan United States Tax Court Survivors’ Annuity Plan Tennessee Valley Authority Retirement System Retirement Annuity Plan for Employees of Army and Air Force Exchange Service Supplemental Deferred Compensation Plan for Members of the Executive Management Program (Army and Air Force Exchange Service) U.S.A.F. Nonappropriated Fund Retirement Plan for Civilian Employees United States Army Nonappropriated Fund Retirement Plan Retirement Plan for Civilian Employees of United States Marine Corps Morale, Welfare, and Recreation Activities and Miscellaneous Nonappropriated Fund Instrumentalities Navy Exchange Service Command Retirement Plan U.S. Navy Nonappropriated Fund Retirement Plan for Employees of Civilian Morale, Welfare, and Recreation Activities Norfolk Naval Shipyard Pension Plan Federal Reserve Employees’ Benefits System Western Farm Credit District Employees’ Retirement Plan Ninth Farm Credit District Pension Plan Farm Credit District of Springfield Group Retirement Plan Farm Credit District of Baltimore Retirement Plan Seventh Farm Credit District Retirement Plan First South Production Credit Association Retirement Plan Farm Credit District of Columbia, SC Retirement Plan Farm Credit District of Texas Pension Plan Twelfth Farm Credit District Retirement Plan National Bank for Cooperatives Retirement Plan 173 This appendix lists the principal financial, actuarial, and general terms for each of the 34 federal government defined benefit plans. The actuarial data include two presentations of the benefit obligation and the related funding status for each federal government defined benefit plan. (1) Accumulated Benefit Obligation—Statement of Financial Accounting Standards (SFAS) No. 35, Accounting and Reporting by Defined Benefit Plans, prescribes the measure by which private sector defined benefit pension plans calculate the net present value of future benefit payments. Under this actuarial measure, the obligation for future benefits is primarily based on employees’ history of pay and service up to the date that the obligation information is reported. The benefit obligation determined in accordance with SFAS 35 is referred to as the Accumulated Benefit Obligation. Comparing the assets available for plan benefits to the Accumulated Benefit Obligation (the actuarial present value of accumulated benefits, less assets available for benefits) yields one measure of plan funding. In appendix I, a zero or negative total (that is, net assets available for benefits equal or exceed the Accumulated Benefit Obligation) indicates that the plan is fully funded, and, as such, the assets of the plan would satisfy the actuarial present value of accumulated plan benefits if the entity were to cease operations. (2) Actuarial Accrued Liability—Because it is assumed that the federal government will not cease as a going concern, a second actuarial measure of the obligation for future benefits is presented. It is referred to as the Actuarial Accrued Liability. The Federal Accounting Standards Advisory Board (FASAB), issued an exposure draft, Accounting for Liabilities for the Federal Government, which would require the use of the Actuarial Accrued Liability for those federal government pension plans subject to FASAB standards. The Actuarial Accrued Liability represents the present value of benefits expected to be paid in the future to current employees and annuitants, net of the present value of future normal cost contributions expected to be made for and by current employees. It includes the projected future salary increases that reflect an estimate of the compensation levels of the individual employees involved (including future changes attributable to general price level, seniority, promotion, and other factors). Comparing the plan assets to the Actuarial Accrued Liability yields a second measure of plan funding. In appendix I, a zero or negative total (that is, plan assets equal or exceed the Actuarial Accrued Liability) indicates that the plan is fully funded, and, as such, assets in the fund plus the present value of future normal cost contributions would satisfy the actuarial present value of projected benefits to current employees and annuitants, including estimated future salary increases. For both measures described above, plan asset amounts generally are based on fair value. For the Accumulated Benefit Obligation measure, the plan assets generally are valued at the amount that the plan could reasonably expect to receive in a current exchange for those assets. Most plans used the same asset amount for the Actuarial Accrued Liability measure. However, a few plans determined the actuarial value of their assets in a different manner for the Actuarial Accrued Liability measure. For example, for its Actuarial Accrued Liability measure, the Military Retirement System stated the actuarial value of its assets at amortized cost (book value). Thrift Savings Plan (CSRS and FERS) An actuarial cost method in which future service benefits are funded as they accrue. Thus, normal cost is the present value of the units of future benefits credited to employees for service in that year. Prior service cost is the present value at the valuation date of the units of future benefits credited to employees for service prior to the valuation date. Annual normal cost for an individual for an equal unit of benefits each year increases because the period to the employee’s retirement continually shortens and the probability of reaching retirement increases. For a mature employee group, the normal cost would tend to be the same each year as older employees are replaced by younger ones. The actuarial present value of pension benefits attributed by the pension benefit formula to employee service rendered before a specified date and based on service and compensation prior to that date. Benefits that are attributable under the provisions of a pension plan to employees’ service rendered up to the benefit information date. The portion of the present value (as of the benefit information date) of a pension plan’s projected future benefit costs and administrative expenses that exceeds the present value of future normal cost contributions. Estimates of future conditions affecting pension cost; for example, mortality rate, employee turnover, compensation levels, and investment earnings. A recognized technique used in establishing the amount of annual contributions or accounting charges for pension cost under a pension plan. The current worth of amounts payable or receivable in the future. If payment or receipt is certain, the present value is determined by discounting the future amount or amounts at a predetermined rate of interest. If payment or receipt is contingent on future events (for example, survival), further discounting is necessary for the probability that payment or receipt will occur. The process by which an actuary estimates the present value of benefits to be paid under a pension plan and calculates the amounts of employer contributions or accounting charges for pension cost. An actuarial cost method in which the entire unfunded cost of future pension benefits (including benefits to be paid to employees who have retired as of the date of the valuation) is spread over the average future service lives of employees who are active as of the date of valuation. In most cases this is done by the use of a percentage of payroll. Past service cost is included in normal cost. The date as of which the actuarial present value of accumulated plan benefits is presented. A pension plan under which participants bear part of the cost. Moving average of the Social Security wage base computed when a member attains normal retirement age. Some plans offer additional retirement benefits to highly compensated employees who exceed the average Social Security wage base. Assumptions as to rates of plan participants’ withdrawal from the plan, retirement, disability, and death used in making actuarial projections. A pension plan that specifies a determinable pension benefit, usually based on factors such as age, years of service, and salary. A pension plan that specifies the amount of contribution to be made to the plan for each employee. Benefits at retirement are those contributions plus whatever has been earned on them. An actuary enrolled under 29 U.S.C. 1242 by a Joint Board for the Enrollment of Actuaries established by the Secretaries of Labor and the Treasury. An actuarial cost method which assigns a “level normal cost” to each year of service for each participant. The assumption is made under this method that every employee entered the plan (entry age) at the time of initial employment or at the earliest eligibility date, if the plan had been in existence, and that contributions have been made from the entry age to the date of the actuarial valuation. A variation of the entry-age normal actuarial cost method which maintains the initial unfunded liability rather than recomputing it each year, adjusting it only for plan amendments or changes in actuarial assumptions. An estimate of the total benefits payable at retirement, including benefits anticipated to accrue in the future as well as those accruing before the benefit information date. Future benefits may depend on total length of service but with pay averaged over only a limited number of years (often the final 3 years of service). An actuarial cost method which assigns the cost of each employee’s pension in level annual amounts, or as a level percentage of the employee’s compensation, over the period from the inception date of a plan (or the date of his entry into the plan, if later) to his retirement date. Thus, past service cost is included in normal cost. The difference between a plan’s assets and its liabilities. For purposes of this definition, a plan’s liabilities do not include participants’ accumulated plan benefits. A pension plan under which participants do not make contributions. The annual cost assigned, under the actuarial cost method in use, to years subsequent to the inception of a pension plan. Member of a pension plan, including active employees covered by the plan, separated employees entitled to benefits, and retiree and survivor annuitants. A method of paying pension benefits to retired employees as they come due out of appropriations. Calendar, policy, or fiscal year chosen by the plan on which the records of the plan are kept. The actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee service rendered prior to that date, including recognition of changes in future compensation levels if appropriate. In the case of a pension plan established or maintained by a single employer, the employer; in the case of a plan established or maintained jointly by two or more employers, an association, committee, joint board of trustees, or other group of representatives of the parties who have established or who maintain the pension plan. A contract with an insurance company under which related payments to the insurance company are accumulated in an unallocated fund to be used to meet benefit payments, either directly or through the purchase of annuities, when employees retire. Funds in an unallocated contract may also be withdrawn and otherwise invested. 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Summary: Pursuant to a congressional request, GAO reviewed the status of public pension plan funding, focusing on federally sponsored defined benefit and contribution plans subject to reporting requirements legislation. GAO found that: (1) 34 federal government defined benefit plans have over 10 million participants and 17 defined contribution plans have 2.2 million participants; (2) the 34 defined benefit plans vary considerably and have benefits of over $1.2 trillion; (3) most of the defined benefit plans are administered as trust funds which almost exclusively invest in nonmarketable, special issue Treasury securities, while 6 plans pay benefits from their current year appropriations; (4) most agency plans, except for the Federal Employees Retirement System, are underfunded; (5) the 19 nonappropriated fund activity, federal reserve, and farm credit defined benefit plans are fully funded; (6) the use of trust funds has no effect on current budget outlays and is not a measure of the government's ability to pay future retirement benefits out of tax and other receipts; (7) agencies' budgets have not reflected the full cost of their pension plan programs; (8) the 17 defined contribution plans have more than $28 billion invested in stocks, bonds, and government securities, with the Thrift Savings Plan having about $26 billion in Treasury securities; and (9) defined contribution plan obligations are limited to the employee and employer contributions made and any earnings on them.