Public pensions’ asset performance during April 2023 just barely outpaced liability growth, resulting in a slight uptick in funding. The estimated funded status of the 100 largest U.S. public pension plans rose from 74.5% as of March 31, 2023, to 74.8% as of April 30, 2023, as measured by the Milliman 100 Public Pension Funding Index (PPFI). The deficit between the estimated assets and liabilities shrank during April, from $1.534 trillion at the beginning of the month to $1.524 trillion at the end of the month.
Figure 1: PPFI funded ratio
In aggregate, we estimate the PPFI plans experienced investment returns of 0.8% in April, with individual plans’ estimated returns ranging from 0.4% to 1.2%. These returns are largely on par with expectations. The Milliman 100 PPFI asset value increased from $4.492 as of March 31, 2023, to $4.517 trillion as of April 30, 2023. During April, the plans gained market value of approximately $34 billion, which was offset by net negative cash flow of $9 billion.
Figure 2: PPFI investment returns
The total pension liability (TPL) continues to grow and stood at an estimated $6.041 trillion as of April 30, 2023, up from $6.026 trillion as of March 31, 2023. 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 3: PPFI funded status
Given the quiet nature of the market during April, there were no changes in the number of plans below 60% funded (24) or above 90% funded (17). The majority of plans in the study continue to range from 60% to 90% funded.
Figure 4: Funded ratios at April 30, 2023
About the Public Pension Funding Index
This update is an estimate based on Milliman’s 2022 Public Pension Funding Study and was updated for market returns from June 30, 2022, to April 30, 2023. The 2022 annual study encompasses adjustments made as of June 30, 2022, and reflects updated publicly available asset and liability information gathered for the annual study.