U.S. state pension plans’ estimated aggregate funding ratio at the end of fiscal year 2021 jumped to 83.3% from 70% in the previous year, a report from Wilshire Advisors shows.

Based on more than 100 state plans’ most recent annual reports, most of which provide data as of June 30, the aggregate funding ratio is based on $3.957 trillion in aggregate assets and $4.752 trillion in aggregate pension liabilities, according to Wilshire’s 2022 Report on State Retirement Systems.

Asset levels rose 21.6% from $3.253 trillion at the end of fiscal year 2020, well outpacing the rise in aggregate liabilities by 2.3% from $4.647 trillion at the end of the prior fiscal year.

Wilshire attributed the rise in assets to an extraordinary investment return environment, along with contributions. The report said contributions accounted for about 5% of the increase in assets, and nearly 30% of contributions came from plan participants.

Those excellent returns increased the asset value by 27.6% for the year. Benefit payments are estimated to have decreased asset values by 8.1%. “Other” items decreased asset values by 2.9%, according to the report.

On the liability side, the estimated increase due to interest cost (approximately equal to discount rate as a percentage of the beginning-of-year total liabilities) was 6.9%, annual benefit accruals increased liabilities by 1.9% and actuarial losses and “other” in aggregate decreased the liability by 0.9%. Benefit payments are estimated to have lowered liability values by 5.7%.

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