Milliman: Largest US public pension plans’ funding ratio dips to 75% in August

The overall estimated funding ratio of the 100 largest US public pension plans fell to 75% in August due primarily to negative investment returns for the month, according to the Milliman 100 Public Pension Funding index.

During the month of August, Milliman estimated that public pension plans had an aggregate investment return of -2.6%, with an estimated range of -4.1% to -0.9%.

The estimated funding ratio as of July 31 was 77.3%, up from 74% a month earlier thanks to a modest market recovery during that month.

Milliman estimated that only 19 of the 100 largest US public pension plans had funding ratios above 90% as of Aug. 31, said Rebecca A. Sielman, principal and consulting actuary at Milliman and author of the Milliman 100 Public Pension Funding index, in a news release Thursday.

That number is “down from 26 plans at the end of July and 46 at the end of 2021 — highlighting once more the impact of market performance on public pension plan health,” Ms. Sielman said.

Of the 100 plans measured by the index as of Aug. 31, 24 plans were below 60% funded, up from 22 as of July 31. A total of 17 plans had ratios between 60% and 70%, 17 plans were between 70% and 80% and 23 plans were between 80% and 90 %.

As a result of the poor investment returns, estimated assets fell to $4.40 trillion as of Aug. 31 from $4.53 trillion a month earlier, while estimated liabilities rose slightly to an estimated $5.87 trillion from $5.85 trillion.

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