Key Takeaways
- • The funded level of the 100 largest U.S. public pension funds fell to 87.4% in September from 89.0% in August, according to actuary and consulting firm Milliman.
- • Average investment losses of 1.4% erased $112 billion in funding during the month, with plan assets declining to $6.067 trillion from $6.162 trillion.
- • The aggregate funding deficit widened to $877 billion at the end of September from $765 billion at the start of the month, as total liabilities rose to an estimated $6.944 trillion.
- • Plans at 90% funded or higher dropped to 47 from 51, while plans below 60% funded rose to 11 from 10.
- • Milliman's 2027 forecast ranges from 83.4% funded under a pessimistic no-return scenario to 92.7% under an optimistic 14% return scenario, with the baseline 7% return case assumed at most plans' target rate.
Summary
The funded level of the 100 largest U.S. public pension plans declined to 87.4% in September, down from 89.0% in August, according to Milliman, the actuary and consulting firm that tracks the Milliman 100 Public Pension Funding Index (PPFI). The decline reflected an average investment loss of 1.4%, which Milliman said erased $112 billion in funding during the month. Individual plan returns for September ranged from -3.4% to -0.5%.
Total asset value across the 100 plans fell to $6.067 trillion as of September 30 from $6.162 trillion as of August 31. The plans lost approximately $87 billion in market value and experienced a net negative cash flow of approximately $8 billion. Meanwhile, the estimated present value of projected future benefits, or total pension liability, rose to $6.944 trillion from $6.927 trillion at the end of August. As a result, the aggregate deficit between assets and liabilities widened to $877 billion from $765 billion.
Ryan Falls, co-author of the Milliman PPFI, said in a statement that "September's challenging markets caused another decline in assets and funded status for the 100 largest public pension plans." He added that nearly half of the plans remain more than 90% funded and only 11 are below the 60% funding mark, which he said illustrates the underlying health of public pension systems. The distribution shifted modestly: 47 plans were at or above 90% funded, down from 51; 42 plans were between 60% and 90%, up from 39; and 11 plans were below 60%, up from 10.
Milliman provided three scenarios for the plans' funded level as of September 2027. A baseline case assuming a 7% return, which approximates most plans' assumed rate of return, is one scenario. An optimistic case assuming a 14% gain would lift the average funded level to 92.7% by the end of September 2027. A pessimistic case assuming no returns would reduce it to 83.4%.
Total asset value across the 100 plans fell to $6.067 trillion as of September 30 from $6.162 trillion as of August 31. The plans lost approximately $87 billion in market value and experienced a net negative cash flow of approximately $8 billion. Meanwhile, the estimated present value of projected future benefits, or total pension liability, rose to $6.944 trillion from $6.927 trillion at the end of August. As a result, the aggregate deficit between assets and liabilities widened to $877 billion from $765 billion.
Ryan Falls, co-author of the Milliman PPFI, said in a statement that "September's challenging markets caused another decline in assets and funded status for the 100 largest public pension plans." He added that nearly half of the plans remain more than 90% funded and only 11 are below the 60% funding mark, which he said illustrates the underlying health of public pension systems. The distribution shifted modestly: 47 plans were at or above 90% funded, down from 51; 42 plans were between 60% and 90%, up from 39; and 11 plans were below 60%, up from 10.
Milliman provided three scenarios for the plans' funded level as of September 2027. A baseline case assuming a 7% return, which approximates most plans' assumed rate of return, is one scenario. An optimistic case assuming a 14% gain would lift the average funded level to 92.7% by the end of September 2027. A pessimistic case assuming no returns would reduce it to 83.4%.
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