By: Russ Kamp, CEO, Ryan ALM, Inc.
Milliman has released the latest results from their public pension fund index (PPFI). As a reminder, this index analyzes data from the U.S.’s largest 100 public DB pension plans. Pension funding improved for the fifth consecutive month. As a result, the PPFI funded ratio advanced from 83.0% at the end of July to 84.2%, as of August 31, 2025.
“Thanks to continued investment gains, 41 of the 100 largest public pension plans were more than 90% funded in August, with 18 of those plans enjoying a funding surplus,” said Becky Sielman, co-author of the Milliman PPFI.
The pension plans collectively saw estimated August returns of 1.6% in aggregate, with plan performance ranging from an estimated 0.8% to 2.3%. The 1.6% gain translated to a $79 billion increase in funded status for the 100 PPFI plans. It is estimated that plan assets rose from $5.5 trillion as of July 31 to $5.6 trillion as of August 31, while the funding deficit between assets and plan liabilities declined from $1.12 trillion to $1.04 trillion during August.
It is terrific to witness continued asset growth despite several cross currents potentially impacting markets. However, with the prospect for lower interest rates, as the U.S. labor market begins to weaken (ADP reported -32K jobs created in September), the present value of the future benefit payments (liabilities) will rise potentially offsetting future asset performance gains or worse, magnifying asset depreciation. Plan sponsors would be prudent to take some risk from their asset allocation frameworks at this time of improved funding.
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