The funding ratio of state pension plans increased to 70.2% in the 2017 fiscal year, ended June 30, up 2.8 percentage points from the previous fiscal year, Wilshire Consulting reported Monday.
The increase reversed two consecutive years of aggregate funded ratio declines, according to the report.
“A primary driver of the improvement in the funding ratio was the increase in global equity values for the 12-month period ending June 30, 2017,” Ned McGuire, managing director and a member of the pension risk solutions group at Wilshire Consulting, said in a statement. “In fact, the estimated aggregate asset value is the highest since Wilshire began reporting on state retirement system funding levels” — 22 years ago.
On a more somber note, a recent report predicted that within the next decade, some states would face insolvency because of their pensions, absent significant changes.
The Wilshire Consulting report said pension assets for the 71 state retirement systems that reported actuarial data for fiscal 2017 (out of 130 systems from which data were gathered) grew to $3.2 trillion, up more than 9% from $2.9 trillion in 2016. The key drivers of higher asset values were robust investment returns and contributions, it said.