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CRR Analyzes the Effects of Rising Inflation and Investment Losses on Public Pension Plans
On August 16, 2022, the Center for Retirement Research (CRR) at Boston College issued its brief, Public Pensions Contend with Falling Markets and Rising Inflation. According to the brief, Fiscal Year (FY) 2022 has been challenging for state and local pension plans due to large investment losses and rising inflation.
Some key findings include:
- In FY 2022, the aggregate funded ratio declined from 78% to 74%, considerably reversing the gains from FY 2021.
- The effect of rising inflation on pension finances has been moderated by limits to plans’ cost-of-living adjustments (COLAs).
- However, due to limited COLAs, inflation protection is reduced for retirees, mainly for those not covered by Social Security.
The brief is available here.