Economic recovery for public pensions continues in May
Second consecutive month of strong returns pushes funded ratio to 71.3% as funded status improves by $72 billion in May 2020
2.68% return for May 2020
Most sectors of the market continued their COVID-19 recovery from April into May, somewhat easing the financial impact of the February / March market downturn. The estimated funded status of the 100 largest U.S. public pension plans as measured by the Milliman 100 Public Pension Funding Index (PPFI) improved to 71.3%, up from 69.8% at the end of April 2020, and a significant recovery from 66.0% at the end of March 2020.
In aggregate, the PPFI plans experienced a second consecutive positive month since the COVID-19 economic crash in Q1, posting investment returns of 2.68% in May. The Milliman 100 PPFI asset value grew from $3.750 trillion at the end of April to $3.836 trillion at the end of May.
We estimate that the aggregate deficit shrank from $1.619 trillion at the end of April 2020 to $1.547 trillion at the end of May 2020, a $72 billion improvement.
Figure 1: Funded ratio
Figure 2: Investment returns
This quarterly update reflects adjustments made as of the end of June 2019 as part of Milliman’s annual Public Pension Funding Study, found here at milliman.com/ppfs. The adjustments reflect updated publicly available asset and liability information gathered for the annual study.
Public Pension Funding Index, May 2020
The estimated funding status of the 100 largest U.S. public pensions as measured by the Milliman 100 Public Pension Funding Index improved to 71.3%, up from 69.8% at the end of April 2020, and a significant recovery from 66.0% at the end of March 2020.