Wilshire estimates nearly 1.5 percentage point increase in aggregate funded ratio for US State pension plans
The aggregate funded ratio for US state pension plans increased by 1.4 percentage points during the second quarter of 2019 ending at 73.0 per cent, according to Wilshire Consulting, the institutional investment advisory and outsourced-CIO business unit of Wilshire Associates Incorporated (Wilshire).
Wilshire Consulting assists in ensuring 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 2.6 per cent increase in asset values partially offset by a 0.7 per cent increase in liability values. The aggregate funded ratio is estimated to have increased 6.8 percentage points year-to-date and 1.5 percentage points for the trailing twelve months.
The measurement date for many defined benefit public plan sponsors is June 30. Over the past trailing twelve months, we estimate that the funded ratio increased by 1.5 per cent. This increase in funded ratio was driven by the estimated 7.5 per cent return on assets and contributions. If not for contributions, we estimate that the funded ratio would be 3.1 per cent lower at 69.9 per cent.
“The second quarter’s rise in funded ratios was propelled by the best performance for June in Wilshire 5000 history,” says Ned McGuire (pictured), Managing Director and a member of the Investment Management & Research Group of Wilshire Consulting. “The 2.6 per cent increase in asset values during the second quarter compounded the 9.0 per cent asset increase during the first quarter of 2019.”