Hub pension liability grows as stock values take a slide

Boston’s pension obligations have increased, and, as Wall Street suffered another rough day, fiscal watchdogs warn that a bear stock market could take a bite out of the gains the city has made.

“It really relies on market forces,” said Matthew Cahill of the Boston Financial Commission, a watchdog organization. “You take a snapshot of it two months ago and it looks great. If you took a snapshot of it today it might not look as good.”

Boston’s pension liability has ticked up over the past couple of years to $1.51 billion, up from $1.48 billion in 2016, according to the Boston Municipal Research Bureau. But the city remains on track to meet its goal of fully funding these obligations by 2025.

“It’s increasing for a good reason,” the BMRB’s Sam Tyler said of the rising liability, adding it’s in large part thanks to increasingly pru- dent conservative assumptions of life expectancy and returns on investments.

But the Dow plummeted yesterday, dropping 552 points, or 2.21 percent, over the course of the day, the second significant drop in a row — reportedly due to concerns that global economic growth will slow down. The major markets had seen strong growth for the past few years, with 2017 being particularly bullish, before this year’s volatility, featuring a drop-off early in the year, big gains during the summer and a fall back to earth over the past two months.

A downturn for stocks in the long term would spell trouble for pension funding, an area many cities around the country struggle with.

David Tuerck of the Beacon Hill Institute said if pensions were to become much more unfunded, “It would require either more taxes or to disappoint the retirees.”