Top 100 US Public Pensions Lose $23 Billion in Q2

Contributions and lackluster returns outweighed by benefits payments.

Milliman’s top 100 US pension funds took a light hit in the second quarter, losing $23 billion in funding.

The average funded status of the Milliman 100 Public Pension Funding Index went from a 71.4% funded status to 71.2% in the period ended June 30. The investment returns reaped only 0.70% for the quarter, just barely picking up the slack of Q1’s 0.75% loss.

Total investment values at the end of the period rose to $3.577 trillion. While returns were barely positive as the 100 pension plans collectively earned $45 billion in contributions, they were offset by $28 billion in benefits payments.

Becky Sielman, the index’s author, said that it would be tough for the pensions to progress “without the strong investment performance we saw in 2017.” She added that benefit payouts exceeding contributions lead to greater market reliance in order to “buttress funding.”

The total debt for the 100 funds is at $1.448 trillion, the largest since September 2016, when the index was created. In addition, total pension liabilities broke $5 trillion for the first time, at $5.025 trillion.

One plan’s funded status fell under 90%, bringing the total funds in the index below 90% to 14. Of the top 100 US public pensions, 60 are between 60% and 90% funded, and 26 are under 60%.

Sielman would not disclose which fund dipped under 90%.

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