Word pension on folder.
Public pensions continue to see improvements in fiscal performance as average funded ratios, which refers to the calculated average percentage of a group of pension plans’ assets compared to their total liabilities, reached a five-year high of 83.1%, according to the National Conference of Public Employee Retirement Systems’ 2025 Public Retirement Systems Study: Trends in Fiscal, Operational and Business Practices.
Conducted annually since 2011, the Public Retirement Systems Study serves as a key resource that helps public pensions benchmark their performance and provides valuable insights into public sector retirement trends and includes insights from over 200 public pensions collectively managing $3 trillion in assets on behalf of more than 17 million state and local public servants.
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Contributions as a percent of payroll have been increasing in recent years, nearly entirely driven by increases in employer contributions, while 16% of respondents indicated that their systems increased employee contributions in the past year, according to NCPERS.
Overall, the study tells a story of resilience, according to NCPERS. In the span of 20 years, public sector pensions have endured two major economic crises, but by implementing best practices and appropriate plan changes, pensions have shored up funding levels and improved their sustainability. Respondents indicate that public pension priorities for 2025 include improving cyber- and fraud-prevention systems and sustaining target funding levels.
The pensions range from the largest statewide plans to smaller local retirement systems. The 2025 study had record levels of participation that reflect this diverse landscape. The 201 responding systems reported assets ranging from less than $100 million to more than $500 billion. This year's study, conducted in partnership with Greenwald Research, breaks down financial and investment data by fiscal year-end dates to more clearly reflect performance trends over time.
Notably, the report reinforces findings from previous research about the impact of employers' funding discipline on the health of pension plans. Responding systems that received their full actuarially determined contribution reported funded ratios an average of 20 percentage points higher than those that did not receive the full contribution.
“Public pensions have proven to be resilient as they've adapted to economic shifts while continuing to strengthen their financial footing,” said Hank Kim, executive director and counsel for NCPERS. “This study reaffirms that sound governance and disciplined funding strategies are key to long-term stability.
The report “tells a clear story of resilience and strength,” said Kim, “In the span of 20 years, public pensions have endured two major economic crises. Yet with strong governance policies and efficient practices in place, pensions have shored up funding levels and improved their long-term fiscal health.”
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For 2025, the top priorities for pension plans include improving cybersecurity and fraud prevention systems (67%) and sustaining target funding levels (64%). Systems with education beneficiaries and those with 20,000 or more members prioritize improving cybersecurity and updating/acquiring pension administration systems. Those with fewer than 20,000 members prioritize sustaining funding levels.
Other priorities include talent management, member communications and education, and improving the member experience and accessibility of the online portal.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
