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Alternative Market Briefing

Strong investment returns in 2018 help the US states' pension liabilities drop

Wednesday, September 18, 2019

Laxman Pai, Opalesque Asia:

America's state pension funds saw their adjusted net pension liabilities (ANPL) fall during the fiscal year 2018 thanks to strong investment returns during the previous fiscal year, said a report from Moody's Investor Service.

"Continued favorable investment returns, along with a rise in interest rates, will lead to another modest decline in fiscal 2019 reporting before pension liabilities jump up again the following year," said Moody's.

Among the 50 states, North Carolina had the lowest pension burden in fiscal 2018, at 1.7% of state GDP, against a median of 5.5%.

North Carolina's ANPL totaled $9.4 billion, representing 31.4% of state own-source revenue. Meanwhile, Illinois' liabilities remained the highest, at $240.8 billion, representing 505.1% of state revenue and 27.8% of state GDP.

Based on a ranking of ANPL as a percent of state revenue, Kentucky, whose liabilities represented 308.7% of its revenue, came in second, followed by Connecticut, at 285.8%; New Jersey, at 274.9%; and Maryland, at 236.5%.

"Total state adjusted net pension liabilities stood at $1.56 trillion in fiscal 2018, down 3.6% from fiscal 2017," said Pisei Chea, a Moody's AVP-Analyst.

"Healthy investment returns and higher interest rates contributed to lower ANPLs, while the median ratio of ANPL to state GDP fell to 5.5% in fiscal 2018 from 6.2% the prior year," Chea added.

But after another modest decline in fiscal 20......................

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