U.S. State Pension Plans Funding Status – Second Quarter 2023

Santa Monica, Calif., July 11, 2023 – The aggregate funded ratio for U.S. state pension plans increased by an estimated 1.9% during the second quarter of 2023 to end the quarter at 78.2%, according to Wilshire, a diversified global financial services firm. Through its suite of Outsourced Chief Investment Officer (OCIO) and advisory services, Wilshire assists in providing secure and safe retirements for millions of Americans, including those participating in some of the nation’s largest corporate and public retirement plans.

The quarterly change in funding resulted from a 3.4% increase in asset value partially offset by a 0.8% increase in liability value. The aggregate funded ratio is estimated to have increased by 1.9%, 4.6% and 2.8% during the second quarter, year-to-date and over the trailing twelve months, respectively.

“The aggregate funded status increased for a third consecutive quarter with an asset value increase of over 13% during this period,” stated Ned McGuire, Managing Director, Wilshire. “The strong performance of the FT Wilshire 5000 contributed significantly to the increase in asset value marking its strongest performance in the first six months of a calendar year since 2019.” Mr. McGuire added.

A large majority of state-sponsored public pension plans measure their funded ratios as of June 30.  Over the trailing twelve months, Wilshire estimates that the aggregate funded ratio of these plans increased by nearly 3% (2.8%). This improvement in funding can be attributed to the robust total portfolio return, nearly reaching double digits, primarily driven by the performance of public equities.  Overall, global equity returns over the trailing twelve months ending June 30, 2023 recorded a return 16.53% as measured by the MSCI ACWI with US equity returns up 19.03% as measured by the FT Wilshire 5000 index.  

A 12-month review of the funded ratio follows:

The aggregate figures represent an estimate of the combined assets and liabilities of state pension plans included in Wilshire’s 2023 state funding study. The funded ratio is based on liabilities, service cost, benefit payments and contributions in line with Wilshire’s 2023 state funding study.

The assumed asset allocation is below:

About Wilshire

Wilshire is a global provider of market-leading indexes, advanced analytics, and multi-asset investment solutions. A trusted partner toa diverse range of more than 500 leading institutional investors and financial intermediaries, our clients rely on us to improve investment outcomes for a better future. Wilshire advises on over $1.3 trillion in assets and manages $83 billion in assets and is headquartered in the United States with offices worldwide.

More information on Wilshire can be found at www.wilshire.com.

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