The overall funding ratio of the 100 largest U.S. public pension plans rose to 82.6% as of June 30 from 79% three months earlier, according to the Milliman 100 Public Pension Funding index.
The funding ratio is the highest recorded since the inception of the index, according to a news release Wednesday. It is also the first time since Milliman began the index that the estimated deficit fell below $1 trillion, to $975 billion as of June 30 from $1.17 trillion as of March 31.
During the quarter ended June 30, Milliman estimates the public pension plans had an aggregate investment return of 4.26%, with an estimated range of 2.54% to 6.75%. For the 12 months ended June 30, the annualized return was 20%.
"This was a banner quarter for public pensions, though the individual plans in our study saw a range of investment returns," said Rebecca A. Sielman, principal and consulting actuary at Milliman and author of the Milliman 100 Public Pension Funding index, in the news release. "In the coming months, plan sponsors will begin to understand the extent to which the pandemic has affected liabilities, including higher death rates and the impact of furloughs on benefit accruals, pay levels and contributions from active members."
As a result of the aggregate investment returns, estimated assets rose to $4.62 trillion from $4.39 trillion as of March 31, while estimated liabilities also rose slightly to $5.597 trillion from $5.555 trillion.
Of the 100 plans measured by the index, 39 plans had funding ratios above 90%, while 17 plans remained below 60% funded. A total of nine plans had ratios between 60% and 70%, 14 plans were between 70% and 80% and 21 plans were between 80% and 90%.
