U.S. Public Pensions Projected to Hit 84.7% Funding Ratio by Late 2025

Event summary

  • Milliman's 2025 Public Pension Funding Study projects the aggregate funded ratio of the 100 largest U.S. public pensions to reach 84.7% by November 30, 2025.
  • The funded ratio improved from 75.1% in the prior study to 77.7% at the most recent measurement date (June 30, 2024).
  • The underfunding gap narrowed from $1.45 trillion to a projected $1.04 trillion by November 30, 2025.
  • Investment income drove the improvement, with asset gains outpacing liability growth.

The big picture

The projected improvement in the funded ratio reflects strong investment performance, but the persistent underfunding gap highlights ongoing fiscal challenges for public pensions. This trend underscores the importance of robust actuarial analysis and strategic asset allocation in managing pension liabilities. The scale of the underfunding—projected to narrow to $1.04 trillion by late 2025—remains a critical focus for policymakers and pension administrators.

What we're watching

Investment Performance
How sustained asset gains will affect the funded ratio trajectory.
Fiscal Management
Whether employer and member contributions can keep pace with benefit distributions.
Market Volatility
The pace at which economic conditions could impact pension funding stability.