Strong investment returns during the second quarter improved the funded status of the country’s 100 largest public defined benefit (DB) plans by $33 billion, according to research by global consulting and actuarial firm Milliman.
According to the second quarter results of its Public Pension Funding Index (PPFI), this drove the funded ratio of these plans from 72.0% at the end of March to 73.0% as of June 30, 2017. Investment returns were 3.06% in aggregate.
The second quarter also saw four more Milliman 100 plans cross the 90% funded mark. As of the end of the second quarter, 19 plans have funded ratios above 90%; 60 have funded ratios between 60% and 90%; and 21 have funded ratios lower than 60%.
The Milliman 100 PPFI total pension liability increased from $4.698 trillion at the end of the first quarter to an estimated $4.737 trillion at the end the second quarter.
“During the first half of 2017, the number of PPFI plans funded at 90% or above has almost doubled,” observes Becky Sielman, author of the Milliman 100 Public Pension Funding Index. “But while strong market returns have helped plans across the board this spring, the lowest funded plans simply do not have enough dollars in the market for these favorable conditions to boost their funded ratios appreciably. In the absence of more contributions from plan sponsors, these poorly funded plans might find themselves in a position where benefit reforms are necessary in order to maintain their ability to pay benefits.”
To view the Milliman 100 Public Pension Funding Index, go to Milliman.com.