Growing unfunded liabilities confronting many US state and local government pension plans have pushed the topic of public pensions into the spotlight. Unfunded liabilities have increased more rapidly in recent years because of weaker-than-expected investment results, previous benefit enhancements, historical assumptions on investment returns and in some cases, failure to pay the full annual required contribution. Market participants are increasingly weighing the potential repercussions of these growing liabilities as public finance issuers continue to face financial challenges brought on by the lingering economic downturn. This page highlights key Moody’s research that provides insight on public finance pensions and the related credit impact on issuers.
