Industry News

On November 20, 2024, the National Association of State Retirement Administrators (NASRA) released its Public Fund Survey Summary of Findings for FY 2023. The survey presents key data from 101 mostly statewide retirement systems with 130 public pension plans, covering 13.4 million active members, 10.9 million retirees and other annuitants, and holding $4.75 trillion in assets. 

Overall, the retirement systems surveyed represent approximately 90% of state and local DB plan membership and assets as of Fiscal Year (FY) 2023. The Summary of Findings presents information regarding plan funding, membership, benefits, contribution rates, cash flows, and actuarial assumptions.  

According to the report:   

• The aggregate funding level was 76.4% in FY 2023, up from 76.1% in FY 2022. The predominant factor impacting higher funding levels in FY 2023 was attributable to relatively strong investment returns and for the five years ended in FY 2023. 
• Between FY 2022 and FY 2023, the aggregate actuarial value of assets increased 4.7% from $4.49 trillion to $4.70 trillion. The combined actuarial value of liabilities increased 4.4% from $5.89 trillion to $6.14 trillion. Many state and local plans smooth investment gains and losses into the actuarial value of assets over time (typically five years and sometimes longer). 
• Growth in pension liabilities remains at a median rate at or below 4.0% for the sixth consecutive year, as a result of various factors such as plan maturity, lower interest accruals due to reductions in assumed rates of investment returns; actual inflation below expectations; and the effects of many pension benefit reforms (mainly reductions) enacted in recent years.
• The average allocation of plan assets to public equities has declined steadily since the major decrease in global capital markets in 2008-2009. In FY 2023, the allocation to fixed income securities increased slightly to 20.8% and equities at about 43.6%. In recent years, allocations to real estate increased to 7.7% and allocations to alternative investments (such as private equity and hedge funds) was 25.8%, the highest in public pension fund history.
• For most of the Public Fund Survey’s measurement period, the median investment return assumption used by public pension plans was 8.0%. However, in FY 2021 and through FY 2023 (and FY 2024), the median actuarial assumption for investment return was 7.0%. Notably, since 2009, many plans have reduced their investment return assumptions.
• The median growth in covered payroll rose sharply to nearly 7%, which was the highest level recorded in the Survey. The increase was due to accelerating growth in state and local employment and wage growth.
• Since the inception of the survey, employer contribution rates have increased significantly mainly due to larger unfunded pension liabilities. For some plans, higher employer contribution rates are the result of a disciplined approach to contribute all or more of their actuarially determined contributions.   

The survey data is available for each individual retirement system and plan in Appendices A and B. The data includes: plan membership, plan assets and liabilities, and actuarial funding levels.    

The summary is available here.