Repost from Just The News.
If investment returns for Virginia’s pension system come in around negative 6%, the commonwealth’s unfunded liabilities could nearly triple for Fiscal Year 2022, according to a report from the Reason Foundation.
Virginia’s unfunded liabilities for FY2021 were slightly less than $6 billion, but early indicators estimate an average negative 6% return on investments for FY2022. If the commonwealth’s returns are at that rate, its unfunded liabilities would increase to slightly more than $17 billion.
Unfunded liabilities are costs that the Virginia Retirement System must eventually pay out to people, but does not yet have the assets to provide to them. Consistently high unfunded liabilities will either force higher contributions from employees or the costs will ultimately fall on taxpayers, according to Ryan Frost, a policy analyst at the Reason Foundation.
One year of returns will not require immediate changes to contributions, he said, but if it turns into a trend, then that might be necessary.