Milliman: Funding for largest public pension plans improves in third quarter

The aggregate funded status of the 100 largest U.S. public pension funds rose 90 basis points in the third quarter to 71.6% as of Sept. 30, said Milliman's most recent quarterly public pension funding study released Monday.

Asset values rose 2.15% over the quarter to $3.517 trillion, the result of investment returns of 2.97% in aggregate. Liabilities, meanwhile, rose 0.76% over the quarter to an estimated $4.908 trillion.

Also in the third quarter, the plans paid out about $28 billion more in benefits than they took in from employer contributions and participants.

"These plans are moving in the right direction, with two more crossing the 90% funded mark in Q3, bringing the total to 16 plans with 90% funding or above," compared to 14 at the end of June, said Rebecca A. Sielman, principal, consulting actuary and author of the study, in a news release on the results. "But that progress is hampered as plan sponsors reduce their interest rate assumptions to reflect current market expectations — something one-third of the plans in this study have done in their latest reported fiscal year."

There are still 25 plans whose funding ratios are below 60% and 10 that are below 40%, according to the report.