Industry News

In September 2020, the Center for Retirement Research (CRR) released its issue brief, 2020 Public Plan Investment Update and COVID-19 Market Volatility.  The brief examines public pension investments and the implications of the market downturn in the early spring of 2020 due to the COVID-19 pandemic.  According to the brief, although financial markets have recovered from the downturn, most public pension plans will close Fiscal Year (FY) 2020 with an annual return that falls short of actuarial expectations. However, public pension plans typically invest a portion of their assets in U.S. Treasuries, which may be more easily liquidated to cover benefit payments during severe market downturns.

The report concludes, “The market crash raised concerns about public plan li­quidity and vulnerability to sharp market downturns. Although many plans have a negative cash flow and may need to sell assets to pay annual benefits, most also maintain a consistent cache of U.S. Treasuries that could be easily liquidated if necessary.  So, while public pension plans face many long-term fiscal chal­lenges, most are able to weather sharp downturns relatively unscathed.”

The report is available here.