As if they didn’t have enough problems already, state pension funds holding BP shares have lost $1.4 billion as a result of the stock’s plunge.
That’s according to recent data compiled by Bloomberg, which shows that 42 state pension plans have more than 300 million BP shares. Its stock has dropped 50 percent since the Gulf of Mexico well explosion April 20.
The BP disaster comes after public pension funds’ investment holdings lost 21 percent on average last year, according to Wilshire Associates.
To be sure, the BP losses are a drop in the bucket compared to the overall holdings of the pension funds.
The 100 largest public pension funds had more than $2.4 trillion of assets Dec. 31, according to the Census Bureau.
For example, the $58 billion Ohio State Teachers’ Retirement System has $59 million in BP shares.
“This will be less than one-half of a percent of our international holdings,” system spokeswoman Laura Ecklar told Bloomberg.
“If we put it against all holdings, we’re into a lot of decimal points.”
But state pension plans face a bigger problem: they have promised more in benefits than they can afford to pay.
As of 2008, state pension plans were underfunded to the tune of $1 trillion, according to The Pew Center of the States. And the problem undoubtedly has grown worse since then.
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