Major state pension funds’ discount rate continues falling — Fitch Ratings

The average state pension fund discount rate continued falling in fiscal year 2023, albeit at a slower pace than previous years, according to an analysis of 100 major plans conducted by Fitch Ratings. The assumed discount rate was 6.85% compared with 6.88% in fiscal 2022 and down from 7.63% in fiscal 2015.

The number of states making at least the actuarially determined contribution increased, reaching 40 in fiscal year 2023 vs. 37 the previous year. The total has been growing throughout the years. In 2016, 25 states made the actuarially determined contribution.

The median ratio of state pension plan assets to liabilities was 74.6% in fiscal year 2023, down from the prior year’s 82.7%, which Fitch Ratings attributed to lower discount rates that weren’t enough to offset the positive impact from higher contributions, among other items. Fiscal 2023’s ratios ranged from New Jersey's 40.3% to Washington’s 108.6%.