Public Pension Funded Ratio Dips to 88.2% in July, Widening Liability Gap
Event summary
- Milliman's Public Pension Funding Index (PPFI) shows the 100 largest public pension plans' funded ratio slipped from 88.7% to 88.2% in July 2026.
- Plans lost $38 billion in funded status, with a $13 billion market value decline and $8 billion in negative cash flow.
- Total pension liability grew from $6.894 trillion to $6.911 trillion, widening the gap between assets and liabilities to $816 billion.
- Only one additional plan fell below the 60% funded mark, bringing the total to 11 plans, while 49 plans remain above 90% funded.
The big picture
The slight but consistent decline in public pension funded ratios reflects broader market volatility and rising liabilities. While the 6.1% aggregate returns for 2026 demonstrate some resilience, the widening gap between assets and liabilities poses long-term sustainability challenges for plan sponsors. The trend underscores the need for strategic adjustments in investment and liability management to ensure long-term stability.
What we're watching
- Market Resilience
- Whether the 6.1% aggregate returns for 2026 can offset continued monthly declines in funded status.
- Liability Management
- The pace at which pension liabilities grow and how plans adapt to widening gaps between assets and liabilities.
- Funding Thresholds
- How many more plans may fall below the 60% funded mark and the strategic responses from plan sponsors.