“For 2020, pension investment losses could be nearing $1 trillion, according to Moody’s analyst Thomas Aaron. He said this year’s losses will significantly compound the underfunded liabilities currently measured by most public pension funds.
Meanwhile, the economic fallout from the coronavirus is weighing on revenue and threatening to keep government agencies from affording their soaring pension costs. He said the credit impact of the 2020 pension investment losses will depend on a variety of factors. Some of those factors include the severity of the asset declines, each government’s funding and cash flow position, and each agency’s ability to absorb cost increases in their budgets.
If the markets do not bounce back dramatically in 2020, he expects pension investment losses to soar so high that many state and local governments will see damage to their credit quality. Such damage may be due to already heightened pension liabilities and having less capacity to defer costs.“