The pullback in financial markets during April 2024 reduced the estimated funded status of the 100 largest U.S. public pension plans from 79.7% as of March 31, 2024, to 77.6% as of April 30, 2024, as measured by the Milliman 100 Public Pension Funding Index (PPFI).
Figure 1: PPFI funded ratio
We have projected the aggregate funded status forward from April 30, 2024, to April 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 April 2024, the deficit between the estimated plan assets and liabilities widened slightly, from $1.271 trillion at the beginning of the month to $1.404 trillion at the end of the month. In aggregate, we estimate the PPFI plans experienced investment returns of -2.1% in April, with individual plans’ estimated returns ranging from -3.7% to -0.9%. The Milliman 100 PPFI asset value declined modestly, from $4.983 trillion as of March 31, 2024, to $4.864 trillion as of April 30, 2024. During April, the plans shed market value of approximately $110 billion, on top of a net negative cash flow of approximately $9 billion.
Figure 3: PPFI investment returns
The total pension liability (TPL) continues to grow and stood at an estimated $6.268 trillion as of April 30, 2024, up from $6.254 trillion as of March 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
With April’s market decline, four plans slipped from just above to just below the 90% funded mark as of April 30, 2024; now there are 21 plans above this benchmark, down from 25 plans as of March 31, 2024. Meanwhile, at the lower end of the spectrum, 15 plans remain less than 60% funded.
Figure 5: Funded ratios at April 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 April 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.