Milliman Sees Public Pension Funding Ratios Decline to 75.3% in August

Poor performance in equities was to blame for the dip in pension funding levels.

released the results of its August 2023 Public Pension Funding Index data, an index that tracks data from the largest 100 public defined benefit plans.  

Pension funding declined in August to 75.3% from 76.8% in July. Milliman attributed the decline in pension funding to poor market performance: The S&P 500 returned negative 1.7% in August, the worst monthly performance of the year.  

The deficit between assets and liabilities for this group of public pension funds increased to $1.508 trillion from $1.41 trillion by the end of August. Milliman estimated that plans included in the dataset lost $74 billion in market value, on top of net negative cash flows of $10 billion.  

Total pension liabilities grew to $6.099 trillion at the end of August, an increase from $6.085 trillion in July, and the value of the Milliman 100 PPFI declined to $4.591 trillion from $4.675 trillion. Milliman estimated that the aggregate investments return across all PPFI plans was negative 1.6%. 

The biggest declines in funding ratios came at the pension plans with the highest funding. According to Milliman data, 23 plans have funding ratios below 60%; unchanged from July, 60 plans have ratios between 60% and 90%, up from 58 the month before; and 17 plans have funded ratios greater than 90%, down from 19 in July. 

“With August’s results, only 17 of the 100 PPFI plans now stand over the 90% funded mark, down from 19 last month,” said Becky Sielman, a Milliman principal and a co-author of the report, in a statement. “However, the number of plans less than 60% funded remained stable at 23.” 

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