The Maine State House in Augusta is pictured on May 6, 2020. Credit: Natalie Williams / BDN

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AUGUSTA, Maine — The main pension plan for state workers in Maine has skirted the worst of the economic fallout of the coronavirus for now, earning just below its expected rate of return during a year that included the first four months of the U.S. pandemic.

Maine’s $12.3 billion public pension plan covering state employees and teachers was funded at 83 percent in June, according to a budget committee presentation from Sandy Matheson, the executive director of the Maine Public Employees Retirement System. That makes it among the top 12 best-funded plans in the country, according to the conservative Tax Foundation.

The plan saw a 7.38 percent rate of return in 2019 and 5.44 percent in the fiscal year that ended on June 30. It looks good next to a projection from Moody’s Investor Services that said most U.S. systems would post returns of 0 or 1 percent over the last fiscal year, Forbes reported.

For the current year, Maine’s assumed rate of return on its pension investments was 6.75 percent, slightly below the national average of 7 percent. That lower-than-average assumed rate protects projections from market swings in exchange for higher state contribution rates. The state also spreads gains and losses out over three years to insulate itself from volatility.

What that means for the state’s contribution rates will not be finalized until October, Matheson said, but the news will relieve lawmakers who will face tough decisions in 2021 when crafting the next two-year budget with Maine projecting $1.4 billion less in revenue over three years.

Public pensions were rocked early on by the coronavirus pandemic as the stock market’s volatility heighted. The market plunged to levels not seen since the last recession in March, although it has posted months of gains since then.

In Maine, how markets change affects what the state pays into the fund, not employee benefits. However, any erosion in the plan could lead to cost-cutting measures like those undertaken in 2011. Matheson warned the plan’s mature status — meaning it has more retirees than active members — will increase its risk as time goes on without further stabilization efforts.

“The only strong path forward is to reduce that discount rate,” she said, referring to the assumed rate of return.

There is great uncertainty surrounding the trajectory of the pandemic’s effects on the economy. Maine forecasters are projecting a slow recovery over the next two years, assuming that no further outbreaks will occur and Congress will provide local aid, a prospect still up in the air.