Despite record returns in 2021, most public pension systems expect unfunded liabilities for the fiscal year that ended on June 30 to nearly double, according to a new survey by the Reason Foundation.

if public pension systems suffer a 6% decline in investments in fiscal 2022, the nation’s aggregate unfunded liability for state-run pension systems would grow to a whopping $1.3 trillion, up $783 billion in 2021, the foundation said. 

The unded ratio of state pensions— the percentage of assets on hand to pay for the retirement benefits already promised to workers—would drop from 85% in 2021 to 75% in 2022, the foundation added.

A 6% loss would mean that California, New York, Texas, Ohio, Florida and Illinois would see their unfunded pension liability spike by over $20 billion compared with 2021, the foundation said.

Georgia, Minnesota, New Jersey, North Carolina, Oregon, Pennsylvania, Virginia, Washington, and Wisconsin would see their unfunded pension liability grow by more than $10 billion.

Another 12 states—Alabama, Arizona, Colorado, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nevada, and Tennessee—would clock in with at least $5 billion in unfunded pension liability, the Reason Foundation said.

“During this time of economic volatility, policymakers and stakeholders should recognize that many of the problems that kept public pension systems significantly underfunded for multiple decades still exist,” foundation researchers said. “This year’s negative returns, as well as the growing signs of a possible recession, show public pension systems should lower their return expectations and view long-term investments as less predictable and more volatile.”