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.
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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.