Virus Causing Anxiety for Already Troubled Retirement Systems.

• Author: Petrini, Anna
• Position: PUBLIC PENSIONS - Covid-19

In addition to its staggering toll on human life and health, the coronavirus has multiplied financial anxieties for millions of Americans. States with chronically underfunded public employee pension plans are also wringing their hands as investment portfolios suffer serious losses and falling revenue projections stress state budgets.

U.S. public pension plans could be staring down an average investment loss of about 21% for the fiscal year ending June 30, according to Moody's Investors Service estimates. Huge losses due to COVID-19 threaten to heap additional debt atop a mountain of unfunded pension liability in some states. That is, absent a rapid market rebound, increased government contributions or decreased benefits for retirees.

But, as some observers point out, COVID-19's full impact on state retirement systems is difficult to predict, and pension funds have two things on their side: diversified holdings and time to ride out market turmoil. California Public Employees' Retirement System CEO Marcie Frost noted in a recent webinar that pensions anticipate market corrections and that traditional defined benefit structures serve as part of the social safety net, helping ensure financial security for millions of retired workers.

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