Wilshire estimates a 3% decrease in the aggregate funded ratio for U.S. state pension plans in the third quarter of 2023.
Santa Monica, Calif., October 23, 2023 – The aggregate funded ratio for U.S. state pension plans decreased by an estimated 3.0% during the third quarter of 2023 to end the quarter at 75.2%, according to Wilshire, a diversified global financial services firm.
Wilshire assists in providing a suite of OCIO and advisory services to some of the nation’s largest retirement plans which help fund theretirement of millions of Americans.
The quarterly change in funding resulted from a 3.0% decrease in asset value and a 0.8% increase in liability value. Despite the 3.0% decrease in the third quarter, recent quarterly funded ratio gains have increased the aggregate funded ratio estimate by 1.6% and 4.7% year-to-date and over the trailing twelve months, respectively.
“The aggregate funded status decrease was due to a decline in asset values. During the third quarter, nearly all asset classes experienced negative returns, resulting in the estimated aggregate performance experiencing the worst quarterly return since the third quarter of 2022” stated Ned McGuire, Managing Director, Wilshire. “This quarter’s ending funded ratio has fallen to its lowest level since the end of 2022.” Mr. McGuire added.
A 12-month review of thefunded ratio follows:
The aggregate figures represent an estimate of the combined assets andliabilities of state pension plans included in Wilshire’s 2023 state fundingstudy. The funded ratio is based on liabilities, service cost, benefit paymentsand contributions in line with Wilshire’s 2023 state funding study whichincludes 134 state pension plans in its universe.
The assumed asset allocation is below:
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