Stock market volatility raises risk for U.S. public pension funds
Recent stock market volatility could sting some U.S. public retirement funds in the short term and lead to bigger state and local government contributions in the event of a prolonged market downturn, pension analysts said on Tuesday.
The portfolios of some funds have bulked up on riskier and more volatile investments over the past eight years, Eileen Norcross, senior research fellow at the Mercatus Center at George Mason University, said.
“Some of these plans are going to suffer, at least in this quarter, losses of some sort,” she said.
But Rebecca Sielman, a consulting actuary at consulting firm Milliman, said an important component in calculating funding for nearly all public retirement systems is smoothing out gains and losses over typically a four- to five-year period to dampen the impact of market volatility.
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