Industry News

On August 18, 2025, S&P Global Ratings published its report, U.S. Public Pension Funded Ratios Improved In 2024, And 2025 Expectations Show A Continuing Upward Trajectory. In the report, S&P Global Ratings assessed the U.S. public pension funded ratios. In fiscal year ended June 30, 2025, S&P Global Ratings expects asset performance will slightly improve funded ratios for U.S. public pensions with an expected 11%-12% return. This may add to the positive returns for fiscal 2024 that are estimated to be 16%-17%.

The key findings include: 

• U.S. public pension funded ratios are expected to continue increasing in fiscal year 2025 due to overall positive market returns.
• Although S&P Global Ratings updated their discount rate guideline from 6.0% to 6.5% due to recent market participant expectations and forecasts, the adjustment is not expected to meaningfully change their pension analysis.
• Return expectations may be affected by an economic transformation from supply-chain disruption and emerging new technologies such as AI.

According to the report, “Should U.S. public pension plans continue to exceed expectations, with technological growth persisting as new technologies mature, and the Fed’s rates stabilize, we could see market gains and improved funding for these plans. On the other hand, economic stresses from rising U.S. debt, wealth concentration, or rapid changes to a turbulent economic and political environment could turn markets downward. Pension plans remain pressured by employees and retirees to restore benefits, particularly as funded levels improve. If these issues are not well managed, such as through budgetary means or plan design features that share risk among interested parties, pension costs could rise.”

The report is available here.