The global rout of financial markets this year is putting pressure on state and local government pension funds in the U.S., many of which were already struggling to pay for the future retirement benefits of public-sector workers.

The hit to the returns of retirement systems for firefighters, police and civil service employees could, in turn, endanger the financial health of local governments that have to pick up the tab, according to a Tuesday report penned by analysts at Moody’s Investors Service.

“Recent U.S. public pension investment losses, which we estimate are approaching $1 trillion, stand to severely compound the pension liability challenge already facing many governments,” said Tom Aaron, vice president at Moody’s, in the note.

Since the financial crisis, such concerns have been shared by municipal bond analysts who have worried a slump in public pension funding levels after a recession could hurt the overall creditworthiness of municipalities.

As of March 20, public pension plans were on pace for an average investment loss of about 21% in the fiscal year ending on June 20, according to Moody’s estimate.

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This article quotes selections from “Market rout leaves public pension funds nursing a nearly $1 trillion loss for fiscal 2020: Moody’s,” by Sunny Oh in  Market Watch, 3/24/2020.