The overall estimated funding ratio of the 100 largest U.S. public pension plans reached 78.2% at the end of December, the highest level of 2023, according to the Milliman 100 Public Pension Funding index.

After three straight months of declines due to negative market returns in August through October, the estimated ratio rose for the second straight month in December. As of Nov. 30, the estimated ratio has risen to 75.9% from 72.4% at the end of October.

The late-year rally came as a result of a market rebound in both November and December. According to Milliman, aggregate estimated investment gains were 5.2% in November and 3.3% in December.

“The late-year rally pushed nine more plans above 90% funding so that 21 plans stood above this key benchmark as of December 31 — a big jump from the 12 we saw as of October 31, 2023,” said Rebecca Sielman, principal and consulting actuary at Milliman and author of the Milliman 100 Public Pension Funding index, in a Jan. 25 news release.”On the other end of the spectrum, 11 plans moved above 60% funding, leaving only 15 of the 100 plans below this level compared with 26 at the end of October, a good sign for the overall health of public pensions,” Sielman said.

Also as of Dec. 31, a total of 20 plans had ratios between 60% and 70% (up from 19 as of Oct. 31), 20 plans were between 70% and 80% (down from 24), and 24 plans were between 80% and 90% (up from 19).

As a result of the positive investment returns during November and December, estimated assets dropped to $4.857 trillion from $4.48 trillion as of Oct. 31, while liabilities grew to an estimated $6.213 trillion from $6.185 trillion.