With some investment returns likely falling as far as 15 percent, states are going to face a cumulative pension debt of between $1.5 trillion and $2 trillion by the end of the year.
by Eric Boehm
Even after an impressive bull run on the stock market, state pension funds across the country were facing more than $1 trillion in unfunded debts even before the COVID-19 pandemic struck.
Now, the gap between what pension funds have promised to current workers and retirees and the funds available to make those payments is expected to grow—perhaps quite dramatically.
With some investment returns likely declining by as much as 15 percent this year, thanks to the COVID-19 pandemic, states are going to face a cumulative pension debt of between $1.5 trillion and $2 trillion by the end of the year. That’s according to separate estimates released this week, first by Reason Foundation (which publishes this Reason) and shortly after by the Pew Charitable Trusts.