A second month of positive growth in public pension assets during June 2024 slightly increased the estimated funded status of the 100 largest U.S. public pension plans from 79.4% as of May 31, 2024, to 79.9% as of June 30, 2024, as measured by the Milliman 100 Public Pension Funding Index (PPFI).
Figure 1: PPFI funded ratio
We have projected the aggregate funded status forward from June 30, 2024, to June 30, 2025, under three scenarios. The baseline scenario assumes each plan’s future investment returns equal that plan’s current reported interest rate assumption (median rate = 7.0% in this study). The “optimistic” and “pessimistic” scenarios assume each plan’s investment returns are 7% higher and lower, respectively, than that plan’s current reported interest rate assumption.
Figure 2: PPFI funded ratio with projections
During June 2024, the deficit between the estimated plan assets and liabilities decreased from $1.293 trillion at the beginning of the month to $1.266 trillion at the end of the month. In aggregate, we estimate the PPFI plans experienced investment returns of 1.0% in June, with individual plans’ estimated returns ranging from 0.4% to 2.1%. The Milliman 100 PPFI asset value increased from $4.989 trillion as of May 31, 2024, to $5.030 trillion as of June 30, 2024. During June, the plans gained market value of approximately $50 billion, which was offset by a net negative cash flow of approximately $9 billion.
Figure 3: PPFI investment returns
The total pension liability (TPL) continues to grow and stood at an estimated $6.296 trillion as of June 30, 2024, up from $6.282 trillion as of May 31, 2024. Just as pension assets grow over time with investment income and shrink over time as benefits are paid, so too does the TPL grow over time with interest and shrink as benefits are paid. The TPL also grows as active members accrue pension benefits.
Figure 4: PPFI funded status
June’s positive market growth pushed two more plans over the 90% funded mark as of June 30, 2024; now 25 plans stand above this benchmark compared to 23 as of May 31, 2024. Meanwhile, at the lower end of the spectrum, 15 plans remain less than 60% funded.
Figure 5: Funded ratios at June 30, 2024
About the Public Pension Funding Index
This update is an estimate based on Milliman’s 2023 Public Pension Funding Study and was updated for market returns from June 30, 2023, to June 30, 2024. The 2023 annual study encompasses adjustments made as of June 30, 2023, and reflects updated publicly available asset and liability information gathered for the annual study.