Report Puts Pension Funding Gap In New Light

As reported in the Washington Post, state pensions face a much larger funding gap than their financial reports typically reveal, according to a new calculation released Thursday by the credit rating firm Moody’s Investors Service.  As described,

In its report, Moody’s used a corporate bond rate to project the future value of pension fund assets. Many states are using rates that make their pension systems look much healthier than they are, thus allowing governments to contribute less to the plans each year, critics of such practices say.

Moody’s said its methodology is a more accurate way of measuring the financial burden posed by public-employee pensions. It also compared the size of each state’s pension liabilities with what that state could muster in funds.

In that area, Maryland had pension liabilities totaling 99.5 percent of revenues, according to Moody’s.  The report relies on governmental revenues as reported in each state’s consolidated annual financial report, which include federal funds.

For more information see the full story from the Post, Moody’s Report, and our past coverage on Conduit Street, The Financial Health of the Maryland State Pension System.