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Pension Funds

U.S. public pension plans see funded status dip in second quarter – Milliman

The aggregate funded status of the 100 largest U.S. public pension plans dipped slightly to an estimated 71.2% as of June 30, down from 71.4% as of March 31, said Milliman's most recent quarterly public pension funding study, released Monday.

Asset values rose an estimated 0.5% during the quarter to $3.577 trillion, while liabilities increased 0.8% to $5.025 trillion. In aggregate, these plans saw quarterly investment returns of 0.7%, up from -0.75% during the first quarter.

The second quarter's investment returns caused one public pension fund to drop below the 90% funded mark, bringing the total number of plans with funding ratios of higher than 90% to 14. Of the remaining plans analyzed, 60 had funding ratios between 60% and 90%, and 26 were below 60%. Eleven plans remain below 40% funded.

"Without the strong investment performance we saw in 2017, it's difficult for these public pensions to gain ground," Rebecca A. Sielman, principal, consulting actuary and author of the study, said in a news release about the results. "If a plan's benefits paid out exceed contributions coming in, reliance on the market is even more crucial to buttress funding."

The report also found that the plans earned investment market value of about $45 billion, partially offset by $28 billion in outflows as benefits paid out exceeded contributions coming in from employers and plan members.