This article discusses a study of the financial health of a few state employee pension funds. The study sought to estimate what would happen to these funds if there was another sharp downturn in the investment markets. It found that at least two funds, Kentucky and New Jersey, are in such bad shape that they could run out of money if there’s another serious market decline.
Governments have been ramping up contributions to the funds to help cover the promises they’ve made to retirees, but that leaves less money to spend on schools, police, parks and other core government services.
Another option is reducing pension benefits. A plan to do that in Kentucky led to teacher walkouts earlier this year.