Public pension systems in the United States are under pressure. Investment returns are in doubt, and the state and local governments that provide significant funding for benefits are facing historic budget shortfalls. We have seen these challenges before—as recently as 2009. Though how public pension systems will address the economic impacts of the COVID-19 pandemic, and what repercussions will confront beneficiaries, investment firms, and pension fund creditors, largely remains to be seen.
This article discusses the relationship between governments and their pension systems; pension “holidays”; reduced investment return assumptions; risks to investment firms, creditors, and beneficiaries; and the impact of a federal bankruptcy.
This piece was originally published by Bloomberg Law on August 14, 2020. It was reproduced with permission from Copyright 2020 The Bureau of National Affairs, Inc. (800-372-1033) www.bloombergindustry.com.