December 12, 2017 / 10:05 PM / a year ago

Public pension funded ratio up in third quarter 2017: report

NEW YORK (Reuters) - The funded status of 100 of the largest U.S. public pension plans grew by $36 billion in third quarter of 2017, boosted by strong equity returns, according to a report released on Tuesday by consulting services company Milliman.

The funded ratio of the plans climbed to 71.6 percent as of Sept. 30, up from 70.7 percent at the end of June, the report said. The plans saw an aggregate investment return of 2.97 percent between July 1 and Sept. 30.

The S&P 500 index over the same period rose 3.96 percent.

The report is based on Milliman’s Public Pension Funding Index, made up of the nation’s largest public defined benefit pension plans.

“These plans are moving in the right direction, with two more crossing the 90-percent funded mark in Q3, bringing the total to 16 plans with 90 percent funding or above,” said Becky Sielman, author of the Milliman 100 Public Pension Funding Index, in a statement.

“But that progress is hampered as plan sponsors reduce their interest rate assumptions to reflect current market expectations — something one-third of the plans in this study have done in their latest reported fiscal year,” she added.

Total pension liability (TPL) grew to an estimated $4.908 trillion at the end of Q3 from $4.871 trillion at the end of Q2.

Sixteen of the plans are above 90 percent funded, while 25 plans are under 60 percent funded and 10 plans are below 40 percent funded, the report said.

Reporting by Stephanie Kelly

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