Equable Institute Analysis: U.S. Public Pension Funds Average 25.7% Investment Return in FY2021

Despite record investment gains, overall funded ratio remains fragile at 80.8%

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Dec 09, 2021, 07:53 ET

NEW YORK, Dec. 9, 2021 /PRNewswire/ -- Today, Equable Institute released the latest results of its analysis of U.S. statewide public pension funds in a mid-year update to State of Pensions 2021. Equable Institute forecasts that the aggregate funded ratio will increase from 70.9% in 2020 to 80.8% in 2021, due to record investment returns currently averaging 25.7% (based on fiscal year returns announced to-date). While funded ratios have improved significantly year over year, pension funds remain fragile as they prepare to weather recent market turmoil.

Equable Institute forecasts that the aggregate funded ratio for U.S. public pension funds will increase from 70.9% in 2020 to 80.8% in 2021. The $1.49 trillion pension funding gap from 2020 will decrease to $1.12 trillion in FY 2021.

As the year comes to a close, Equable Institute projects the $1.49 trillion pension funding gap from 2020 will decrease to $1.12 trillion in FY 2021.

Although there are many positive indicators suggesting that more U.S. public pension funds may be on a path to resilient funded status, state retirement systems will have to navigate a new era of inflation and a changing investment return environment heading into 2022.

"This past year has been an incredibly helpful boost to state pension funds that spent a decade mired in mediocrity, but even a nearly $400 billion improvement in funded status hasn't been enough to land those retirement systems in a collective place of stability," said Equable Institute executive director Anthony Randazzo. "It will be important for state pension boards to use the opportunity created by historic returns to buy down their investment assumptions and put themselves in a less vulnerable funding position in the coming years with more muted investment returns."

To read the State of Pensions December 2021 Update, access interactive data visualizations, and download raw data, visit: http://www.equable.org/stateofpensions.

About Equable Institute
Equable is a bipartisan non-profit that works with public retirement system stakeholders to solve complex pension funding challenges with data-driven solutions. We exist to support public sector workers in understanding how their retirement systems can be improved, and to help state and local governments find ways to both fix threats to municipal finance stability and ensure the retirement security of all public servants.

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SOURCE Equable Institute