Public pension plan funding levels are a good sign for the overall health of public pensions - report
The public pension funded ratio rose to 78.2 percent at end of December, the highest level of 2023, says Milliman in its latest Public Pension Funding Index (PPFI), which consists of the 100 largest US public defined benefit pension plans. This update is an estimate based on Milliman’s 2023 Public Pension Funding Study.
The Milliman 100 PPFI funded ratio rose from 72.4 percent as of October 31 to 75.9 percent as of November 30 before reaching 78.2 percent funding as of December 31, the highest ratio of 2023. The late-year market rebound drove this result, as the plans experienced, in aggregate, estimated investment gains of 5.2 percent in November and 3.3 percent in December. Individual plan returns ranged from 2.5 percent to 7.7 percent in November and from 1.7 percent to 5.0 percent in December. Combined, the Milliman 100 PPFI plans gained market value of $162 billion in December, with asset values rising to $4.857 trillion as of December 31, offset by a monthly net negative cash flow of $9 billion.
“The late-year rally pushed nine more plans above 90 percent funding so that 21 plans stood above this key benchmark as of December 31 – a big jump from the 12 we saw as of October 31, 2023,” says Becky Sielman, co-author of Milliman’s PPFI. “On the other end of the spectrum, 11 plans moved above 60 percent funding, leaving only 15 of the 100 plans below this level compared with 26 at the end of October, a good sign for the overall health of public pensions.”
