Slight negative investment return of -0.1% during June contributes to $30 billion decrease in funded status for largest U.S. public pension plans

Slightly negative market performance and anticipated benefit accruals during June 2026 decreased the estimated funded status of the 100 largest U.S. public pension plans during June, as measured by the Milliman 100 Public Pension Funding Index (PPFI). During the month, the plans’ funded ratio slipped from 89.1% as of May 31, 2026, to 88.7% as of June 30, 2026.

We have projected the aggregate funded status forward from June 30, 2026, to June 30, 2027, under three scenarios. The baseline scenario assumes each plan’s future investment returns equal that plan’s current reported interest rate assumption (median rate = 7.0% in this study). The “optimistic” and “pessimistic” scenarios assume each plan’s investment returns are 7% higher and lower, respectively, than that plan’s current reported interest rate assumption.

The Milliman 100 PPFI asset value decreased from $6.129 trillion as of May 31, 2026, to $6.116 trillion as of June 30, 2026. During June, the plans lost market value of approximately $5 billion, on top of a net negative cash flow of approximately $8 billion. As a result, the deficit between the estimated plan assets and liabilities increased during June, from $748 billion at the beginning of the month to $778 billion at the end of the month.

In aggregate, we estimate the PPFI plans experienced investment returns of -0.1% in June, with individual plans’ estimated returns ranging from -0.9% to 0.7%. However, the aggregate return on assets for the 2026 calendar year to date (January through June) is 6.2%.

The total pension liability (TPL) continues to grow and stood at an estimated $6.894 trillion as of June 30, 2026, up from $6.877 trillion as of May 31, 2026. Just as pension assets grow over time with investment income and shrink over time as benefits are paid, so too does the TPL grow over time with interest and shrink as benefits are paid. The TPL also grows as active members accrue pension benefits.

June’s relatively static asset returns kept the number of plans (50) above the 90% funded mark as of June 30, 2026, unchanged. Similarly at the lower end of the spectrum, the number of plans (10) less than 60% funded was also unchanged.

About the Public Pension Funding Index

This update is an estimate based on Milliman’s 2025 Public Pension Funding Study and was updated for market returns from June 30, 2025, to May 31, 2026. The 2025 annual study encompasses adjustments made as of June 30, 2025, and reflects updated publicly available asset and liability information gathered for the annual study.