The aggregate funded status of the 100 largest U.S. public pension plans rose to an estimated 71% as of March 31, from 67.2% as of Dec. 31, said Milliman's most recent quarterly public pension funding study, released Tuesday.
Asset values rose an estimated 6.5% during the quarter to $3.697 trillion, while liabilities increased 0.8% to $5.21 trillion. In aggregate, these plans saw quarterly investment returns of 7.3% in the first quarter vs. -6.4% in the fourth quarter.
The first quarter's investment returns led to 6 plans moving back above the 90% funded mark; 14 plans are now above this mark, compared to 8 at the end of the fourth quarter. At the lower end, the number of the more poorly funded pension plans also decreased, with 28 plans whose funded ratios fall below 60%. Nine plans remain below 40% funded.
"The first quarter of 2019 was a welcome relief for public pensions after the dismal investment performance at the end of 2018," said Rebecca A. Sielman, principal, consulting actuary and author of the study, in a news release about the results. "But even with the market fluctuations of the past six months, it's important to bear in mind that these pensions have time horizons measured in decades. Plan sponsors should take this volatility as a reminder to review their asset smoothing policies, to ensure the short-term market fluctuations don't translate into short-term contribution volatility."
The report also found that the plans gained investment market value of about $252 billion, which was offset by about $26 billion flowing out, as benefits paid out exceeded contributions coming in from employers and plan members.