Pandemic Ups Risk From Rising University Pension Costs

December 3, 2020

Financial pressures stemming from the pandemic -- including low enrollments, campus closures and pandemic-related expenses -- will make it more difficult for colleges and universities to keep up with rising pension costs, according to a new report from Moody’s Investors Service.

Pension liabilities have increased year after year, said Adam Hardi, vice president at Moody’s.

“The associated credit risks are highest for universities in the U.K. and the U.S., followed by Canada and Mexico because defined benefit pension plans are their primary pension schemes,” Hardi said in a statement.

Brand recognition, government support or sector-specific action will be essential in addressing the resulting credit pressures, the report said. But the ratings agency doesn’t anticipate sizable increases in government funding.

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