Public Pensions' Lost Decade

The economic downturn, driven by inflation and rising interest rates, has battered investment portfolios, including those of state and local employee pension funds. With markets down about 20 percent this year, the overall funding level for government pension systems has fallen back to where it was more than a decade ago. The result: taxpayers will be asked to contribute more to make up for pension shortfalls—an increasingly common outcome over the past 20 years. In addition, the number of pension systems with asset levels approaching a critical stage has increased, and the length of time that troubled systems will take to dig themselves out of their mess has grown again. In some states, underfunded pensions have become constant sources of fiscal chaos. Read Full Article »