The funding ratio for state retirement systems fell 4 percentage points to 69 percent in fiscal 2016 due to weak stock price performance and a strengthening U.S. dollar, according to a report issued on Monday by advisory firm Wilshire Consulting.

It is the second consecutive year the funded ratio dropped by 4 percentage points, and the first year since 2010 that the aggregate funded ratio is below 70 percent, according to the report.

The report studied the funding ratio, or ratio of pension assets to liabilities, of 131 state retirement systems.
“U.S. stock performance was low in the fiscal year ending June 30, 2016, while a strengthening U.S. dollar dampened already negative performance of non-U.S. dollar investments,” Ned McGuire, vice president and a member of the Pension Risk Solutions Group of Wilshire Consulting, said in a statement.

In an interview, McGuire explained that 103 of the pension systems provided actuarial data for 2016. Wilshire used estimates for the remaining 28 systems, which only reported their data through 2015.

For the 103 state retirement systems that reported actuarial data for 2016, pension assets and liabilities were $2.35 trillion and $3.53 trillion, respectively, the report said.

Pension assets of the 103 systems decreased 1.8 percent in 2016 compared with the prior year, while liabilities grew 5.4 percent during the same period, the report said.

Ninety-seven percent of the 103 systems that reported actuarial data for 2016 were underfunded, the report said.

Full Content: Reuters

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