Industry News

In March 2021, the Society of Actuaries (SOA) released its report, Trends in Maturity Metrics, Asset Allocations and Assumed Rates of Return for Large U.S. Public Pension Plans. The report analyzes 139 U.S. state-based and large local defined benefit pension systems or plans from 2001 to 2018.

The key findings include:

• Generally, large public plans matured significantly whereas local plans were slightly more mature than state plans.
• Although plans steadily matured, they were more sensitive to the effects of financial shocks, and their asset allocations typically shifted toward those considered riskier, more complex and less transparent.
• Typically, plans lowered their assumed rates of return on assets. The median rate of return for all plans studied declined from 8.00% in 2001 to 7.25% in 2018.
• In 2018, plans that were less than 60% funded were more mature than those that were more than 60% funded.
• From 2001 to 2018, the median assumed rate of return fell from 8.50% to 7.00% for plans that were less than 60% funded in 2018; 8.00% to 7.32% for plans 60% – 80% funded in 2018; and 8.00% to 7.25% for plans at least 80% funded in 2018.

Brian Murphy, Senior Consultant at GRS, served as one of the reviewers of the study report.

The report is available here.