Key Takeaways
- We expect U.S. public pension funded ratios will improve in fiscal 2024 due to positive market results in the first half.
- U.S. public pensions face growing risks because discount rates used to measure the funded ratio are based on increasingly diverse and opaque asset allocations.
- Inflation affects many pension factors, and the Consumer Price Index (CPI) has crossed below long-term rates.
- Pension obligation bond (POB) issuance could make a comeback, although not until rates fall further.
- An aging population exacerbates contribution risk stemming from market volatility.
29 Jan, 2024