Look beyond funded ratios for hidden pension risks
Pension funding risk has evolved into a structural debt obligation — akin to an obligor's bonded indebtedness from a secondary credit consideration — having minimal impact on yield levels. Public pension fund risk assessment stands at the intersection of investment management practices and a municipal credit evaluation process for governments and revenue enterprises that prioritizes funding discipline and fiscal capacity. While funded ratios remain a key barometer of pension funding risk, they do not tell the full story. Beyond simply...
