The 100 largest U.S. public pension funds' aggregate liabilities climbed and asset growth struggled to keep up the pace in the 12 months ended June 30, according to an annual study from Milliman.
The study estimates that the aggregate funding ratio of the plans as of June 30 of this year was 70.7%, down from 73.4% as of June 30, 2019.
Estimated aggregate liabilities as of June 30 was $5.43 trillion, up from the reported $5.27 trillion the prior year, while estimated aggregate assets as of June 30 totaled $3.84 trillion, up from $3.82 trillion the year before.
Since many plans lowered their interest rate assumptions following the fiscal year-ends in their reports, Milliman said, the estimated aggregate liabilities and underfunding as of June 30 are likely understated.
The estimates are calculated using the most recent measurement data provided by the plans. About three-quarters of the data provided by plans is as of June 30, 2019.
Among the plans' reports, 18 reported funding ratios of higher than 90%, while 57 reported funding ratios of between 60% and 90%, and 25 plans reported funding ratios lower than 60%.
"Beyond market volatility, which has affected plan assets, we expect that furloughs and shutdowns as a result of the COVID-19 pandemic will impact pay levels and employee contribution amounts, while pressure on government budgets will make it hard to free up dollars to contribute to the plans to shore up their funding," said Rebecca Sielman, principal and consulting actuary at Milliman and author of the study, in a news release. "But public plans have, by and large, shown great resiliency. They are designed and financed to function over a very long time horizon, and can take short-term setbacks in stride."
The study is posted on Milliman's website.