Worst Ever?

According to Milliman’s survey of the largest US 100 public DB pension plans, funded ratios collapsed to 66% from year-end’s 74.9%, as plan’s recorded an average decline of nearly 11% for the quarter. The devastating decline was the largest ever recorded by Milliman in the history of producing their firm’s public pension funding index (PPFI). Furthermore, the losses ($419 billion in market value) wiped out all of the improvement generated by these funds in 2019.

The weak quarter impacted these plans in many ways, as the current deficit (liabilities – assets) ballooned to $1.82 trillion from $1.33 trillion just three months prior. The total liability for this universe of public plans now stands at $5.36 trillion. Only 4 plans currently remain at >90% funded ratios, while 35% of the plans are now below 60%. Can you imagine what these stats would look like if pension liabilities were discounted at a more legitimate rate than GASB’s ROA?

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