Public Pensions Face Liquidity Challenges Thanks To Inflation, More Retirees

Public Pensions Face Liquidity Challenges Thanks To Inflation, More Retirees


Amid higher inflation and more retirements, public pensions are strapped for cash.

Since COVID-19 and the lockdown-induced recession, the inflation rate has risen to 6.2% — the highest level since 1990. Meanwhile, more Americans are retiring — contributing to the labor force participation rate reaching its lowest level since the 1970s.

According to a report from The Wall Street Journal, both trends are pushing pension funds to take steps that ensure their continued liquidity:

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Cash allocations have dropped to a seven-year low at the funds that manage more than $4.5 trillion in retirement savings for America’s teachers, police and firefighters. Public pension funds, which have increasingly turned to illiquid private markets to drive up returns, are now aiming to keep about 0.8% of their holdings in cash, according

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