With a fifth consecutive month of positive investment returns, September 2024 saw the estimated funded status of the 100 largest U.S. public pension plans increase from 82.0% as of August 31, 2024, to 82.8% as of September 30, 2024, as measured by the Milliman 100 Public Pension Funding Index (PPFI). We estimate a year-to-date investment return of 9.4% through the end of September.
Figure 1: PPFI funded ratio
We have projected the aggregate funded status forward from September 30, 2024, to September 30, 2025, under three scenarios. The baseline scenario assumes each plan’s future investment returns equal that plan’s current reported interest rate assumption (median rate = 7.0% in this study). The “optimistic” and “pessimistic” scenarios assume each plan’s investment returns are 7% higher and lower, respectively, than that plan’s current reported interest rate assumption.
Figure 2: PPFI funded ratio with projections
During September 2024, the deficit between the estimated plan assets and liabilities narrowed slightly, from $1.138 trillion at the beginning of the month to $1.090 trillion at the end of the month. In aggregate, we estimate the PPFI plans experienced investment returns of 1.4% in September, with individual plans’ estimated returns ranging from 0.7% to 2.1%. The Milliman 100 PPFI asset value increased from $5.184 trillion as of August 31, 2024, to $5.246 trillion as of September 30, 2024. During September, the plans gained market value of approximately $72 billion, which was offset by a net negative cash flow of approximately $10 billion.
Figure 3: PPFI investment returns
The total pension liability (TPL) continues to grow and stood at an estimated $6.336 trillion as of September 30, 2024, up from $6.322 trillion as of August 31, 2024. 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 4: PPFI funded status
September’s positive asset performance pushed five more plans above the 90% funded mark as of September 30, 2024; now 34 plans stand above this benchmark compared to 29 as of August 31, 2024. Meanwhile, at the lower end of the spectrum, 14 plans still remain less than 60% funded, a modest improvement from 15 plans below this threshold as of August 31, 2024.
Figure 5: Funded ratios at September 30, 2024
About the Public Pension Funding Index
This update is an estimate based on Milliman’s 2023 Public Pension Funding Study and was updated for market returns from June 30, 2023, to September 30, 2024. The 2023 annual study encompasses adjustments made as of June 30, 2023, and reflects updated publicly available asset and liability information gathered for the annual study.