The outbreak of the coronavirus pandemic over the last several months has caused worldwide economic, social, and political upheaval. After a decade of general growth, economies are now faced with a major contraction as social distancing becomes the norm and entire industries are forced to confront new realities. For public pensions, many of which were already struggling with staggering unfunded liabilities and other problems, this economic downturn presents a major challenge.
In their latest issue brief, “Public Pensions and COVID-19: Confronting a Crisis, and Opportunities for Reform,” the Institute for Pension Fund Integrity seeks to examine the overall impact of the coronavirus on public pension plans across the country and evaluate the implications that it will have for future policy decisions.
The market downturn of the last several months has exacerbated the funding shortfalls facing many public pensions funds across the country, all but wiping out recent gains that had been made as a result of the strong economic growth of the past several years. Mismanagement and an unwillingness to implement reforms for years before this crisis has already put public pensions in a precarious position. Unfortunately, the new challenges that public pension funds will have to confront in the months to come are not a direct result of the fallout from coronavirus, but rather an extension of the problems that they have failed to adequately address up to this point.
In the face of these grave challenges, public pension fund managers are now in a position to implement long-needed reforms to their investment, management, and public policy strategies and re-commit to the principals of fiduciary responsibility in public pension fund investment. This will be especially important for states and localities seeking federal assistance to shore up their pension funds.
Read the latest issue brief ““Public Pensions and COVID-19: Confronting a Crisis, and Opportunities for Reform” here.