Olivia Mitchell, a professor at the Wharton School at the University of Pennsylvania, said public pension plans face “grave difficulties”.
“I do believe that US cities and towns will continue to suffer, and there will be additional bankruptcies following the examples of Detroit and the cities of Vallejo, Stockton and San Bernardino,” she said.
The worsening pension deficit means cities and states will have to contribute more to retirement plans, according to Mr Aaron, forcing them to either find new sources of revenue, such as by raising taxes, or reducing workforces or cutting services.
The Moody’s research additionally found that fewer than half of the 56 pension plans it examined received government pension contributions at an adequate level to reduce the funding gap.
A study by Wilshire Associates, the consultancy, published earlier this month, showed that state-sponsored pension plans in the US had just 73 per cent of the assets they needed to pay current and future retirees in mid-2015, down from 77 per cent in 2014. In 2007, this was 95 per cent.