The public pension fund industry has urged calm despite being in the middle of one of the worst economic downturns in history and facing mounting losses by the day.
Alicia Munnell, director of the Center for Retirement Research at Boston College and a former member of the president’s Council of Economic Advisers from 1995-97, said on a long term basis, the outlook was less dire than many had made out.
She concluded: “This is a once in a lifetime dramatic period of turmoil but there is no need to panic yet and pension funds are largely well funded and are long term in their vision.
“A year from now asset valuations should be higher [and] only if the situation is prolonged will we really have to worry. Many believe that public pension funds especially are in trouble but that is false. The public sector, where most of the largest pension funds reside, will not need cash flow for payments that may be called upon in the private sector.”