Strong Showing for Public Pension Funded Ratios in Q1

Public pensions’ funded ratios improved in the first quarter of 2017 — and some markedly so. That according to a report on the 100 largest U.S. public pension plans.

According to Milliman’s 100 Public Pension Plan Funding Index, the overall funded ratio for those plans stood at72% by March 31. In dollars, the improvement over the last quarter of 2016 translates to a rise of $78 billion.

The news was best for the 15 plans whose funding levels surpassed 90%. The news was almost as good for the 70 plans whose funding levels were between 50% and 89%. Only 21 plans had funding levels below 60%; 25 were in that category in the fourth quarter of 2016.

Investment returns were almost 10 times those of the previous quarter. The top 100 closed out 2016 with investment returns of 0.45% and ended the first quarter of this year with returns of 4.29%.

The good news included a drop in the gap between pension liabilities and the market value of assets. The deficit for the top 100 public pension plans was $1.392 trillion at the end of the fourth quarter of 2016, and fell by $78 billion in the first quarter of this year.