Wilshire estimates over six percentage point increase in aggregate funded ratio for US state pension plans in Q4 2020
The aggregate funded ratio for US state pension plans increased by an estimated 6.3 percentage points during the fourth quarter of 2020, ending the quarter at 78.6 per cent, a 3.8 percentage point increase from December 2019, according to Wilshire.
Through its suite of Outsourced Chief Investment Officer (OCIO) and advisory services, Wilshire 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 9.5 per cent increase in asset values partially offset by a 0.8 per cent increase in liability values. With a more than six percentage point increase during the fourth quarter, the aggregate funded ratio is estimated to have returned to pre Covid-19 levels and increased by 3.8 percentage points over calendar year 2020.
“A third consecutive quarterly increase in asset values of 9.5 per cent, following the 11.8 per cent and 5.1 per cent increases in the second and third quarters, respectively, more than fully reversed the funded ratio decline during the first quarter and resulted in an estimated funded ratio increase of nearly four percentage points over calendar year 2020,” says Ned McGuire, Managing Director, Wilshire. “The fourth quarter’s increase was driven by positive returns for most asset classes, led by multiple record high closes for the Wilshire 5000 Total Market Index.”