The overall estimated funding ratio of the 100 largest U.S. public pension plans fell to 73.6% as of Feb. 28 from a month earlier, according to the Milliman 100 Public Pension Funding index.
During the month of February, Milliman estimated that public pension plans had an aggregate investment return of -2%, with an estimated range of -2.9% to -1%.
The February decline came after the opening month of the year saw strong returns leading to a rise in its estimated funding ratio. Milliman estimated that the overall ratio had risen to 75.4% as of Jan. 31 from 72.6% at the end of 2022. The firm estimated that public pension plans had an aggregate investment return of 4.4% in January, with a range of 2.7% to 6.5%.
"Despite the seesaw market performance in January and February, 17 plans remain at least 90% funded, which is the same number at that level on Dec. 31," said Rebecca A. Sielman, principal and consulting actuary at Milliman and author of the Milliman 100 Public Pension Funding index, in a news release Tuesday. "While this is still much lower than the 46 plans at this healthy benchmark at the end of 2021, there was some positive news in February, as two plans moved above the 60% funded mark by the end of the month."
A total of 24 plans were estimated to be below 60% as of Feb. 28, down from the 26 plans estimated to be below that benchmark as of Dec. 31.
Also as of Feb. 28, a total of 20 plans had ratios between 60% and 70% (up from 17 as of Dec. 31), 22 plans were between 70% and 80% (up from 21) and 17 plans were between 80% and 90% (down from 19).
As a result of the negative returns for the month ended Feb. 28, estimated assets fell to $4.423 trillion from $4.521 trillion a month earlier, while estimated liabilities rose slightly to an estimated $6.011 trillion from $5.997 trillion.
