The overall funding ratio of the 100 largest U.S. public pension plans rose to 79% as of March 31 from 78.6% the quarter before, 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 Monday.
It also represents the breadth of the recovery in the year since the overall funding ratio fell to 66% on March 31, 2020. That ratio had reflected plummeting returns following the emergence of the COVID-19 pandemic.
Since then, however, public pension plans have recovered, although the long-term impact of the pandemic has yet to be seen.
"While 2021 has proven to be a strong year for public pensions so far, there are still lingering questions around the impact of the COVID-19 pandemic on these plans," said Becky Sielman, principal and consulting actuary at Milliman and author of the Milliman 100 Public Pension Funding index, in the news release. "The past year has seen workforce volatility and strain on state budgets which could put downward pressure on funding in the future."
During the quarter ended March 31, Milliman estimates the public pension plans had an aggregate investment return of 1.95%, with an estimated range of -0.95% to 4.79%. For the 12 months ended March 31, the annualized return was 27.7%.
As a result of the aggregate investment returns, estimated assets rose to $5.555 trillion from $5.513 trillion as of Dec. 31, while estimated liabilities also rose to $4.389 trillion from $4.335 trillion.
Of the 100 plans measured by the index, 31 plans had funding ratios above 90%, while 22 plans remained below 60% funded. A total of nine plans had ratios between 60% and 70%, 17 plans were between 70% and 80% and 21 plans were between 80% and 90%.
Further information on the index is available on Milliman's website.