By Andrea Riquier
Public-pension funding surged in 2021 thanks to buoyant financial markets, taking funding levels to the highest in over a decade.
As of June 30, 2021, the aggregate funded ratio of the 100 largest U.S. public pension plans is estimated at 85%, according to the 2021 Public Pension Funding Study from Milliman, an actuarial company, marking what the group calls “a stunning improvement” from 70% in 2020.
It’s also the highest level of funding in the eight-year history of Milliman’s report. According to another data source, Public Plans Data at the Center for Retirement Research, which covers a larger universe of pension plans, the last time funding was so high was 2007.
The “funded ratio” of a public pension plan refers to the assets it has, divided by its obligations to all current workers, current retirees and any applicable beneficiaries.