Wilshire Estimates Three Percentage Point Increase in Aggregate Funded Ratio for U.S. State Pension Plans in the Fourth Quarter of 2022, but a Greater Than 18 Percent Decrease for the Calendar Year.
The aggregate funded ratio for U.S. state pension plans increased by an estimated 3.1 percentage points during the fourth quarter of 2022 to end the quarter at 68.4%, an 18.3% decrease from December 2021, 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 5.2% increase in asset values partially offset by a 0.5%increase in liability values. Although the aggregate funded ratio is estimated to have increased by 3.1% during the fourth quarter, it is estimated to have decreased by 18.3%over the calendar year 2022.
“This marks the first quarterly increase in funded ratio since the fourth quarter of 2021,” stated Ned McGuire, Managing Director, Wilshire. “Calendar year 2022 caps a volatile year for markets with the FT Wilshire 5000 Index ending 2022 down 19%, which is its fourth worst calendar year return. This quarter’s ending funded ratio has fallen to its level at the end of the second quarter of 2020 after the onset of COVID-19.” Mr. McGuire added.
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 2022 state funding study. The funded ratio is based on liabilities, service cost, benefit payments and contributions inline with Wilshire’s 2022 state funding study.
The assumed asset allocation is below:
Wilshire is a global financial services firm providing diverse services to various types of investors and intermediaries. Wilshire’s products, services, investment approach and advice may differ between clients and all of Wilshire’s products and services may not be available to all clients. For more information regarding Wilshire’s services, please see Wilshire’s ADV Part 2 available at www.wilshire.com/ADV.
Wilshire believes that the information obtained from third party sources contained herein is reliable, but has not undertaken to verify such information. Wilshire gives no representations or warranties as to the accuracy of such information, and accepts no responsibility or liability(including for indirect, consequential or incidental damages) for any error, omission or inaccuracy in such information and for results obtained from its use.
This material may include estimates, projections, assumptions and other "forward-looking statements." Forward-looking statements represent Wilshire's current beliefs and opinions in respect of potential future events. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual events, performance and financial results to differ materially from any projections. Forward-looking statements speak only as of the date on which they are made and are subject to change without notice. Wilshire undertakes no obligation to update or revise any forward-looking statements.
Wilshire Advisors LLC (Wilshire) is an investment advisor registered with the SEC. Wilshire® is a registered service mark.
Copyright © 2023 Wilshire. All rights reserved.
The Digital Asset Taxonomy System now classifies 1,594 assets, the broadest coverage on the market
The index outperformed a 0.34% monthly return for the HFRX Global Hedge Fund Index
Wilshire has been applying highly tested theories and approaches to our client solutions since 1981.
You can count on our team of experts to help improve investment outcomes for a better future.