State pension plans’ funding ratio fell to 69% in fiscal year 2016, down four percentage points from a year earlier, Wilshire Consulting reported Monday.
“U.S. stock performance was low in the fiscal year ending June 30, 2016, while a strengthening U.S. dollar dampened already negative performance of non-U.S. dollar investments,” Ned McGuire, vice president and a member of the pension risk solutions group at Wilshire Consulting, said in a statement.
“Ultimately, the net effect was that the difference between pension liabilities and pension assets grew during the fiscal year.”
Wilshire Consulting’s annual state funding report was based on data gathered from 131 retirement systems sponsored by the 50 states and the District of Columbia. Of these, 103 systems reported actuarial values on or after June 30, 2016, and the remaining 28 systems last reported before that date.
The report found that for the 103 state retirement systems that reported actuarial data for 2016, pension assets shrank by 1.8% to some $2.3 trillion, while liabilities grew by 5.4% to $3.5 trillion.
Those plans’ aggregate shortfall, or net pension liability, increased by $222.4 billion over fiscal 2016 from $963.2 billion to $1.2 trillion.
Ninety-seven percent of the 103 state retirement systems that reported actuarial data for 2016 were underfunded. The average underfunded plan had a ratio of assets to liabilities equal to 66%.
By comparison, of the 131 state retirement systems that reported actuarial data for fiscal 2015, 94% were underfunded. The average underfunded plan in 2015 had a ratio of assets to liabilities equal to 72%.