For years, the country’s public pension plans have faced a yawning gap between what they owe and what they can pay.
From the State of California’s public employees’ retirement plan, with more than 1.6 million participants, to tiny funds for employees of local mosquito-control programs in Illinois, public pensions are the time bomb of government finance.
Now the coronavirus pandemic has it ticking faster.
Already chronically underfunded, pension programs have taken huge hits to their investment portfolios over the past month as the markets collapsed. The outbreak has also triggered widespread job losses and business closures that threaten to wipe out state and local tax revenues.
That one-two punch has staggered these funds, most of which are required by law to keep sending checks every month to about 11 million Americans.
Last week, Moody’s investors service estimated that state and local pension funds had lost $1 trillion in the market sell-off that began in February. The exact damage is hard to determine, though, because pension funds do not issue quarterly reports.
Read the rest of the article in The New York Times.
This article republishes selections from “Coronavirus Is Making the Public Pension Crisis Even Worse,” an article by Mary Williams Walsh for The New York Times, 4/2/2020.