New hires will see a cut in benefits after state governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion, according to a report.

In the 14 months ending December 16, state funds for 109 states have declined 37 percent to $1.46 trillion, Bloomberg reported

In the same period Standard & Poor's saw its 500 stock index fall 41 percent.

The $865 billion in losses, which exceed the $700 billion Troubled Asset Relief Program that Congress approved in October, comes as states face budget deficits totaling $42 billion.

According to analysts, funds will require an annual return of 52 percent on assets for it to in 2010 reach its 2007 actuarial funding levels.

Annual returns of 18 percent would achieve the goal by 2013.

California