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The 100 largest U.S. public pension public plans' liabilities outpace asset growth

Monday, December 07, 2020

Laxman Pai, Opalesque Asia:

The 100 largest U.S. public pension funds' aggregate liabilities climbed and asset growth struggled to keep up the pace in the 12 months ended June 30, said a study.

According to an annual study from Milliman, the study estimates that the aggregate funding ratio of the plans as of June 30 of this year was 70.7%, down from 73.4% as of June 30, 2019.

The aggregate Total Pension Liability reported at the last fiscal year-ends (for most plans, this is June 30, 2019) was $5.27 trillion, growing from $5.07 trillion as of the prior fiscal year-ends, said a press release from the provider of actuarial and related products and services.

And between the 2019 and 2020 Public Pension Funding Study (PPFS), over one-quarter of the plans (28) lowered their interest rate assumptions, with 90 of the plans now reporting assumptions of 7.50% or below.

While the impact of the COVID-19 pandemic on public pensions' financials is not fully clear, plans in this year's PPFS experienced a huge swing in the estimated combined investment return, from -10.81% in Q1 2020 to 10.72% in Q2.

More concrete evidence of the pandemic's impact will be available once next year's financial statements are published pointed out 2020 PPFS.

"Beyond market volatility, which has affected plan assets, we expect that furloughs and shutdowns as a result of the COVID-19 pandemic will impact pay levels and employee contribution amounts, while pressure on gov......................

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