With the financial markets still unable to find the bottom, fear is running rampant from Wall Street to Main Street.  It’s unfortunate that Bloomberg’s public pension reporting this week is fueling that fear through the use of selective data and extreme anecdotes.  Somehow, the reporting missed a wide body of research regarding public pensions that indicates the stories featured are the rare exception, not the rule.

For example, last year the U.S. Government Accountability Office – widely considered a credible watchdog – testified before Congress that “most state and local government pension plans have enough resources set aside to fund the benefits they are scheduled to pay over the next several decades.”  Somehow, Bloomberg missed this fact.

Research by the Boston College Center for Retirement Research indicates that judging the adequacy of public pension fund “requires more than a snapshot of the ratio of assets to liabilities.”  The analysis found that “despite the absence of a federal mandate, state and local plans have generally made great strides towards funding” and “use a more stringent funding yardstick” than their private sector counterparts.”  Somehow, Bloomberg missed this as well.

Yes, all investors are suffering in this seemingly endless Category 5 financial hurricane.  Our recent analysis of Federal Reserve and Census Bureau data on public pensions found that public pensions followed well-established practices for prudent, long-term investing before, during, and after the last big market plunge in 2001.  This data-driven analysis indicates that public plans are positioned to recover from today’s financial crisis in a manageable way.  Another fact Bloomberg missed.

While it is important for readers to understand the consequences that result when political expediency, rather than expert advice drives decision making about public pension financing, it is equally important for readers to have the benefit of accurate reporting on how widespread such problems really are. 

Beth Almeida
Executive Director
National Institute on Retirement Security