Industry News

On July 9, 2024, Moody’s Ratings reported that state and local unfunded pension liabilities declined for the fourth consecutive year. As of June 30, 2024, their pension liabilities have decreased by over $3 trillion, or about 60%, since fiscal year 2020. This decline was mainly due to strong investment performance and higher market interest rates.

In addition, for fiscal year June 30, 2024, Moody’s estimated that U.S. public pension systems have earned about 11% above their targets which ranged from 6.75% to 7.25%. It also found that stronger state and local government pension plan contributions will continue to strengthen asset accumulation.

However, Moody’s cautions that the greatest pension risk for governments is exposure to volatile investment performance in equities and alternatives. In addition, another pension risk is the effect of inflation that continues to impact government employee wages.

The report is available here.