Public Pension Funded Ratio Slips to 88.2% as of July 31, 2026, Milliman Finds

Milliman’s Public Pension Funding Index (PPFI), which tracks the 100 largest U.S. public pension plans — covering teachers, police officers, firefighters, and other state and local government workers, many of them union-represented — showed an aggregate funded ratio of 88.2% as of July 31, 2026. That’s down from 88.7% a month earlier, and it continues a trend that has been drifting slowly lower over recent months rather than a single sharp drop.

What pulled the number down

Milliman points to two combined factors: a roughly flat investment return of about -0.1% for July — the same as June — and ongoing negative cash flow, meaning these plans are paying out more in benefits than they’re collecting in contributions. In dollar terms, the 100 plans lost a combined $38 billion in funded status during July, made up of a $13 billion drop in assets plus about $8 billion in negative net cash flow.

It’s not all one direction, though: Milliman also notes that PPFI plans have posted an aggregate return of about 6.1% so far in 2026, and nearly half of the 100 plans tracked remain above 90% funded. This is a monthly wobble inside a still-decent year, not a collapse.

Not a crisis — but not nothing, either

An 88% funded pension is not a broken one. Most actuaries consider anything above 80% reasonably healthy, and the index has been published monthly to quarterly by Milliman for over a decade, making it a widely cited industry benchmark rather than a one-off alarm. But the direction of travel matters to any teacher, police officer, firefighter, or other public-sector union family counting on that pension check to eventually help cover retirement and final expenses. A fund that’s paying out more than it takes in, month after month, is worth watching — especially alongside other 2026 retirement-security stories already covered here, like the PBGC’s proposed rescue-rule updates and the 2027 Social Security COLA estimate.

What a funded pension doesn’t pay for

It’s worth being precise about what a funded ratio actually measures: a plan’s ability to keep paying the monthly retirement income it has promised. It was never designed to hand a family a lump sum for an $8,000-to-$13,000 funeral bill or other final expenses that land the moment someone passes, and most public pensions offer little to no death benefit for survivors beyond, at most, a limited spousal continuation of income.

That’s a fact-based opening to talk about a small, level-premium final expense or whole life policy that fills that specific gap regardless of how a pension fund performs in any given month — coverage that doesn’t depend on investment returns or future contribution levels. For union and public-sector households layering retirement income with final-expense planning, our final expense page, cost guide, and free calculator are good starting points, and who we serve covers the households we work with most.

Source

• BusinessWire: Milliman Analysis — Public Pension Funded Ratio Slips Again to 88.2% as of July 31
• Milliman: Public Pension Funding Index

Frequently Asked Questions

How well funded are the largest public pension plans in 2026?

Milliman’s Public Pension Funding Index found the 100 largest U.S. public pension plans had an aggregate funded ratio of 88.2% as of July 31, 2026, down from 88.7% a month earlier.

Why did the funded ratio decline in July?

Milliman attributed the drop to a roughly flat investment return of about -0.1% for the month, combined with negative net cash flow as plans paid out more in benefits than they collected in contributions. Together, a $13 billion drop in assets and about $8 billion in negative net cash flow reduced funded status by a combined $38 billion in July.

Does an 88% funded pension cover final expenses for a family?

Generally, no. A pension’s funded ratio measures its ability to keep paying promised retirement income, not to cover a lump-sum funeral bill or final medical costs. A small, level-premium final expense or whole life policy is designed to fill that specific gap regardless of how a pension fund performs in any given month.