Large public pension funds had a difficult second quarter, as the 100 largest U.S. public pension plans lost a combined $262 billion in funding during June, according to actuarial and consulting firm Milliman.

The deficit between the estimated assets and liabilities widened to $1.521 trillion at the end of the month from $1.259 trillion at the end of May, as the public funds’ asset value dropped to $4.318 trillion from $4.566 trillion.

crisis

The estimated funded ratio for the 100 pension funds fell to 74.0% at the end of June from 78.4% at the end of May. The Milliman Public Pension Funding Index estimates that the plans reported an average investment loss of 5.13% for June alone, with losses ranging from 2.27% to 7.49% during the month.

Replacement

The total pension liability for the pension funds rose to an estimated $5.839 trillion at the end of June from $5.825 trillion a month earlier. The falling markets sent eight of the plans below the 90% funded level, with just 19 of the 100 plans still above this mark, compared with 27 a month earlier and 46 at the end of 2021. At the same time, five plans fell below the 60% funded level, raising the total number of plans under this threshold to 26, from 21 at the end of May and 18 at the end of last year.

turnarounds

“Public pensions have seen their funding tumble during June 2022, thanks to the continuing turmoil in financial markets,” Becky Sielman, author of Milliman’s Public Pension Funding Index, said in a statement. “Combined with the normal growth in liabilities, these public pensions saw their aggregate deficit rise by $262 billion in June alone.”

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