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Pension Funds

Average funding ratio for public pension plans increases in 2018 — NCPERS survey

Average one-year investment returns also rise

The average funding ratio for public pension plans rose in 2018 from the year before, while the average one-year investment returns jumped significantly on a year-over-year basis, said results of an annual survey by the National Conference on Public Employee Retirement Systems.

Results of the 2018 NCPERS Public Retirement Systems Study showed that the average funding ratio for all plans that responded rose to 72.6% in 2018, from 71.4% in 2017. For pension plans that participated both years, the average funding ratio jumped to 72.2%.

"The nation's public pension systems are constantly adapting plan designs and assumptions to strengthen their ability to provide a secure retirement for millions of retired public servants," said Hank H. Kim, executive director and chief counsel, in a news release announcing the survey results.

Meanwhile, one-year investment returns averaged 13.4% for all pension plans reporting in 2018, well above the 7.8% average return reported in 2017.

The survey also showed that the average annual investment return assumption dropped to 7.34% in 2018, from 7.49% in 2017. Nearly two-thirds of survey respondents — 65% — had reduced their assumptions, with 18% saying they were considering doing so.

"Pension fund results improved in 2018 even as they became more conservative in their assumptions," Mr. Kim added.

The survey received responses from 167 state and local government pension funds totaling more than $2.5 trillion in assets. Of the respondents, 62% were local pension funds, while 38% were state plans. NCPERS conducted the eighth annual study from September through December in partnership with Cobalt Community Research.