Recession Rocks State and Local Pensions, ‘Funding Gap’ Possible

The economic shutdown caused by the coronavirus will result in a steep drop in tax revenue for state and local governments, forcing them to make difficult decisions about how to fund the state pension systems their employees rely on for their retirement.

Pensions are largely funded from three sources: investment returns, employer mandated contributions on behalf of the workers, and employees who give a portion of their salaries. While funds have pared some losses on the investment front thanks to a bounce-back in the stock market, the ongoing recession will create problems for participating employers and the workers themselves.

The ...