September was the sixth straight month of funding improvement for the 100 largest U.S. public pension plans, as measured by the Milliman 100 Public Pension Funding Index (PPFI). During the month, the plans’ estimated funded status continued to climb, rising from 84.2% as of August 31, 2025, to 85.4% as of September 30, 2025—just shy of the previous high-water mark of 85.5%, which was observed on December 31, 2021. Meanwhile, the gap between estimated plan assets and liabilities narrowed to $971 billion as of September 30, 2025. The last time this deficit fell below $1 trillion was also at the end of 2021, when the funding gap was $833 billion.
Figure 1: PPFI funded ratio
We have projected the aggregate funded status forward from September 30, 2025, to September 30, 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 September 2025, the deficit between the estimated plan assets and liabilities decreased from $1.043 trillion at the beginning of the month to $971 billion at the end of the month. In aggregate, we estimate the PPFI plans experienced investment returns of 1.7% in September, with individual plans’ estimated returns ranging from 0.9% to 2.7%. The Milliman 100 PPFI asset value increased from $5.570 trillion as of August 31, 2025, to $5.657 trillion as of September 30, 2025. During September, the plans gained market value of approximately $96 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 $6.628 trillion as of September 30, 2025, up from $6.613 trillion as of August 31, 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
Thanks to September’s asset growth, 45 plans are now above the 90% funded mark, up from 41 as of August 31, 2025. Meanwhile, at the lower end of the spectrum, 11 plans remain less than 60% funded.
Figure 5: Funded ratios at September 30, 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 September 30, 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.