Source: The Middle Market
State and local government contributions to public pensions hit their highest level last year and investment returns are running above average in 2024, according to a new report by Equable Institute, which said risks are growing as the funds ramp up bets on risky private capital strategies.
The annual report published by the nonprofit projects the national public pension funding shortfall to drop this year to $1.3 trillion from $1.6 trillion in 2023. The average funded ratio of public pensions will increase to nearly 81 percent from about 76 percent last year, the group said.
The improvement is attributed to record high contribution rates: state and local governments paid more than 31 percent of payroll or $180.7 billion into their public retirement systems last year, and the average public pension fund generated preliminary returns of 7.4 percent for the first six months of the year, above the assumed baseline of 6.9 percent.