Public Pensions Had a Good Q1

The country’s 100 biggest public defined benefit pension plans experienced a funding increase of $185 billion in the first quarter, thanks mainly to robust investment gains of 7.3% in aggregate, Milliman, a consulting and actuarial firm, reported Monday.

This improvement was the largest quarterly funding increase since Milliman rolled out its public pension funding index in September 2016. It came on the heels of the biggest quarterly decrease of $306 billion in the fourth quarter.

Milliman estimated that first quarter investment returns of the public DB plans ranged from a low of 3.5% to a high of 11.6%. As a result, it reported, their funding status climbed from 67.2% at the end of December to 71% at the end of March.

In a statement, the index’s author Rebecca Sielman said that even with the market fluctuations of the past six months, it was important to remember that the pensions have time horizons measured in decades.

“Plan sponsors should take this volatility as a reminder to review their asset smoothing policies, to ensure the short-term market fluctuations don’t translate into short-term contribution volatility,” Sielman said.