Administration

Public Pensions Funded Status Improves in Q1

Due to strong market performance during Q1 2017, the funded status improved for the 100 largest public DB plans in the country, Milliman finds.

By PLANSPONSOR staff editors@plansponsor.com | May 10, 2017

Global consulting and actuarial firm Milliman released first quarter reporting from its Public Pension Funding Index (PPFI), which tracks the country’s 100 largest public defined benefit (DB) pension plans.

During Q1 2017, the funded ratio of these plans regained ground lost at the end of last year, climbing from 70.1% at the end of December to 72.0% as of March 31, 2017. The firm says that strong investment returns, measuring 4.29% in aggregate, helped these plans’ funded status improve by $78 billion for the quarter. This led public asset growth to outpace the rise in pension liabilities.

"Thanks to robust market performance in Q1, the funded ratios for our Milliman 100 plans improved across the board, with five additional pensions crossing the 90% funded mark," says Becky Sielman, author of Milliman's PPFI. "And while quarterly investment returns dwarfed those of Q4, the wide range in performance—from a low of 2.12% to a high of 5.06%—highlights the challenge that lies ahead for many poorly funded plans."

Fifteen of the 100 plans tracked by Milliman have funded ratios above 90%, 64 have funded ratios between 60% and 90%, and 21 have funded ratios less than 60%.

Milliman reports “the 100 PPFI total pension liability (TPL) increased from $4.659 trillion at the end of Q4 to an estimated $4.698 trillion at the end of Q1. The TPL is expected to grow modestly over time as interest on the TPL and the accrual of new benefits outpaces the benefits paid to retirees.”

To view the Milliman 100 Public Pension Funding Index, go to http://www.milliman.com/ppfi/

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