Wall Street losses hurt Montana state pensions

Montana's state pensions systems reeling from big losses in the stock market face a projected shortfall of more than $2 billion three decades from now.

The grim but not unexpected news was delivered Thursday to an interim legislative committee working to find ways to fix the problem.

The Montana Board of Investments said the projected shortfall in 30 years tops $2 billion. A year ago that unfunded liability - or projected shortfall - was a little more than $1 billion.

Projecting the shortfall helps determine how much money needs to be dumped into the system to make sure there is enough to pay for future benefits. It's illegal for the state to cut benefits it has already promised to current and past employees.

Other public pensions and investment companies around the country report similar projections.

The Montana Teachers' Retirement System had an unfunded liability of $1.41 billion as of July 1, compared with $794.6 million a year ago.

The Montana Public Employees' Retirement System saw its unfunded liability grow to $790.6 million from $439.4 million a year ago.

Gov. Brian Schweitzer and the Legislature have poured $175 million of state general fund money into the system since 2005.

The stock market losses have been so steep that there is no realistic chance that future returns on retirement investments will make up the loss, officials said.

The system has to earn about 8 percent a year to meet future obligations. The stock market would have to earn a lot more than that to cover the losses of the past year.

The Board of Investments is looking at reducing benefits for future employees, changing the way benefits are calculated or altering annual cost-of-living increases.