The aggregate funded ratio for U.S. state pension plans increased by 1.4 percentage points during the second quarter of 2019 ending at 73%, according to Wilshire Consulting.
The quarterly change in funding resulted from a 2.6% increase in asset values partially offset by a 0.7% increase in liability values. The aggregate funded ratio is estimated to have increased 6.8 percentage points year-to-date and 1.5 percentage points for the trailing 12 months.
Wilshire says this increase in funded ratio was driven by the estimated 7.5% return on assets and contributions. It notes that, if not for contributions, it estimates that the funded ratio would be 3.1% lower at 69.9%.
The aggregate figures represent an estimate of the combined assets and liabilities of state pension plans included in Wilshire’s 2019 state funding study. The Funded Ratio is based on liabilities, service cost, benefit payments and contributions in-line with Wilshire’s 2019 state funding study.
The assumed asset allocation is 29% in U.S. Equity, 18% in Non-U.S. Equity, 10% in Private Equity, 24% in Core Fixed Income, 6% in High-Yield Bonds and 13% in Real Assets.