CT braces for impact of market downturn on pension reserves – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Advisor News
Newswires RSS Get our newsletter
Order Prints
July 25, 2022 Newswires No comments
Share
Share
Tweet
Email

CT braces for impact of market downturn on pension reserves

Hour (Norwalk, CT)

Jul. 25—As Connecticut continues to chip away at a state debt load among the highest in the country — the outcome of setting aside too little money for pensions and retiree health plans — states nationally could see their debts balloon this year as a result of the swooning stock markets, according to a new study.

The advocacy nonprofit Reason Foundation is forecasting a 6 percent drop in investment returns for the 2022 fiscal year ending last month, which would help push unfunded liabilities above $1.3 trillion across nearly 120 plans charged with safeguarding state pensions.

Last Wednesday, the administration of Gov. Ned Lamont announced $4.1 billion in transfers from the state budget for the fiscal year to reduced unfunded liabilities. Coupled with smaller payments in the prior two years, the Office of Policy and Management calculated at $12 billion the potential savings over the coming quarter century.

Related stories

  • Some major REITs limiting cash-out requests from investors
  • Four stages of retirement planning

As of the 2021 fiscal year, Connecticut had funded only 53 percent of the $37.6 billion for which it is on the hook for future pension payouts, according to the Reason Foundation, which has offices in Los Angeles and Washington, D.C. That paired Connecticut with Kentucky for the worst unfunded debt load in the nation, with New Jersey third.

At the other end of the table, New York trailed only Washington and Wisconsin for the best profile, with all of New York's outstanding pension obligations funded with a $46 billion surplus to help absorb any prolonged slump in the stock market.

Earlier this month, Lamont said he was bracing for the impact of the market decline on Connecticut's financial obligations, coupled with the likelihood of an economic recession impacting tax collections. The Dow Jones Industrial Average was off 12.8 percent on the year as of Wednesday afternoon, with the Nasdaq down by twice that margin.

Lamont said the state's "rainy day" fund, now at its $3.3 billion cap under the law, gives the state one option to keep up with its goals for trimming overall debt and obligations.

"Over the last 30 years are fixed costs have been growing, accelerating, eating up more and more of the operating expenses," Lamont said during a Hartford press conference on July 7. "Previous administrations just added to the credit-card debt and hoped that somebody would pay that off — it's like a game of Pac-Man eating up more and more of the budget. We have a long way to go but we have begun bending that curve."

Lamont said the state has focused during his three years in office on paying down pension obligations, having shaved $11.5 billion through additional contributions to the State Employees Retirement System and the Teachers' Retirement System.

Fitch Ratings gave an "AA-" rating in May to Connecticut's newest issue of general obligation bonds, on the lower end of its second tier "very strong capacity" for repayment even taking into account the possibility of a recession and market fluctuations. Fitch Ratings is a New York-based subsidiary of Hearst Corp., which owns CTInsider and Hearst Connecticut Media Group,

"The state has consistently demonstrated the ability to cover its comparatively high fixed costs, including making full actuarial contributions to pensions," Fitch analysts wrote in their May assessment. "The state's long-term liability burden is elevated and among the highest for U.S. states, but still considered moderate relative to personal income."

Includes prior reporting by Ken Dixon.

[email protected]; 203-842-2545; @casoulman

___

(c)2022 The Hour (Norwalk, Conn.)

Visit The Hour (Norwalk, Conn.) at www.thehour.com

Distributed by Tribune Content Agency, LLC.

Older

224593 JOSHUA WHITEHURST

Newer

CBO: Extending enhanced ACA subsidies permanently may net 4.8M increase in signups each year

Advisor News

  • Some major REITs limiting cash-out requests from investors
  • Four stages of retirement planning
  • Can you work while on Social Security?
  • Even on $100K-plus, more Americans are living paycheck-to-paycheck
  • Opinion: the state wealth-tax alliance
More Advisor News

Annuity News

  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
  • Producers stew as insurers slow to process life and annuity applications
More Annuity News

Health/Employee Benefits News

  • Medicaid coverage is expiring for millions of Americans – but there's a proven way to keep many of them insured
  • Health savings account balances increase in 2021
  • Outcome Health trial gets underway with prosecutors alleging former execs were involved in $1 billion fraud scheme
  • Bill incentivizing gun owners to secure firearms addresses public health concern
  • With CalPERS, add another to list of California's botched projects
More Health/Employee Benefits News

Life Insurance News

  • NAIFA’s Future Leaders Program offers free sessions for students
  • Scott Boutin named president of Standard Security Life
  • Agent insists Alex Murdaugh suggested he killed his son
  • 78% of families suffer financially handling estate affairs
  • National Life expands living benefits suite
Sponsor
More Life Insurance News
The time is 06:25:52am test

- Presented By -

Top Read Stories

  • Investors scrambling to lock in rates propel annuity sales to record highs
  • Chicago news roundup: PPP fraud uncovered in Chicago, informant reveals $100K bounty on FBG Duck and more
  • For some, nothing to fear from taking RMDs, professor says
  • North Carolina businessman pleads guilty in multi-million tax fraud case
  • Study: Education level should drive decisions on Social Security, annuities
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.