May 2025 delivered the best monthly market performance in more than a year. The result was an increase in the estimated funded status of the 100 largest U.S. public pension plans from 79.6% as of April 30, 2025, to 81.1% as of May 31, 2025, as measured by the Milliman 100 Public Pension Funding Index (PPFI). Although markets have recently experienced sometimes substantial daily volatility, the past 12 months have seen very little change in PPFI funded ratios, which have hovered in a narrow range around 80%.
Figure 1: PPFI funded ratio
We have projected the aggregate funded status forward from May 31, 2025, to May 31, 2026, 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.
Figure 2: PPFI funded ratio with projections
During May 2025, the deficit between the estimated plan assets and liabilities decreased from $1.340 trillion at the beginning of the month to $1.242 trillion at the end of the month. In aggregate, we estimate the PPFI plans experienced investment returns of 2.4% in May, with individual plans’ estimated returns ranging from -0.2% to 4.2%. The Milliman 100 PPFI asset value increased from $5.213 trillion as of April 30, 2025, to $5.327 trillion as of May 31, 2025. During May, the plans gained market value of approximately $123 billion, which was offset by a net negative cash flow of approximately $9 billion.
Figure 3: PPFI investment returns
The total pension liability (TPL) continues to grow and stood at an estimated $6.569 trillion as of May 31, 2025, up from $6.553 trillion as of April 30, 2025. 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.
Figure 4: PPFI funded status
May’s robust asset performance saw five more plans surpass the 90% funded mark as of May 31, 2025; now 30 plans stand above this benchmark compared to 25 as of April 30, 2025. Meanwhile, at the lower end of the spectrum, one plan climbed above the 60% funded mark, leaving the total number of plans under this benchmark at 11 compared to 12 as of April 30, 2025.
Figure 5: Funded ratios at May 31, 2025
About the Public Pension Funding Index
This update is an estimate based on Milliman’s 2024 Public Pension Funding Study and was updated for market returns from June 30, 2024, to May 31, 2025. The 2024 annual study encompasses adjustments made as of June 30, 2024, and reflects updated publicly available asset and liability information gathered for the annual study.