Industry News

On January 27, 2026, S&P Global Ratings published its report, Four U.S. Public Pension Points to Watch in 2026. In the report, S&P Global Ratings presents four possible trends that it is monitoring for U.S. Public Pensions in 2026.

The key trends include: 

• As of fiscal 2025, S&P Global Ratings indicated that U.S. public pension funded ratios have reached an average of over 80%, increasing about 10 percentage points since fiscal 2022. Funded ratios are expected to continue an upward trend driven primarily by positive market returns.
• By increasing allocations to alternative investments, particularly private equity and private market debt, U.S. public pensions may face higher risks of contribution volatility.
• Since 2020, there has been a trend of increasing workplace disabilities that may continue and lead to increased pension costs.
• Following the 2008 recession, every state enacted some pension plan reforms to implement cost savings, which may be reduced as affected employees gain experience.

Although the report does not constitute a rating action, it states, “Most reforms were enacted in 2010 and 2011, indicating that states have 15 years of employee turnover under the reformed plans. These savings are starting to noticeably affect costs for states and local governments, contributing to the improved funded ratios.” It adds, “if reforms are undone and pension costs rise, government budgets may again experience financial stress with little recourse.”

The report is available here.