While state and local governments cannot put their stimulus directly towards pensions, depending on how the federal government enforces this restriction, they will still have the leeway to free up money that can then go towards pensions (or be spent on budgetary items that have been cut in recent years due to growing pension obligations).
Public pensions will continue to use overly optimistic assumptions about how their investments will perform, accounting tricks that mask the true size of their pension liabilities, and underreport how much money is needed to fund them.
They will also continue to expose themselves to risky investments in order to attempt to shore up funding gaps. In fact, as the fiscal health of pensions plummeted following the 2008 financial crisis, pension plans only doubled down on the practice.
Author(s): Daniel J. Smith, Eileen Norcross
Publication Date: 27 March 2021
Publication Site: The Free Lance-Star