Answers to Questions for the Record Following a Hearing Conducted by the Senate Committee on the Budget on "Running the Government for Less"

Answer. There is no single best way to capture the budgetary effects of federal pension plans. As required by law, the Congressional Budget Office estimates the budgetary effects of federal defined benefit pension plans on a cash basis—that is, transactions are recorded when annuity payments are made or revenues are received. Although that method recognizes the cost of outlays when they occur, it does not reflect the cost of expected future outlays when the commitment to make those outlays occurs.