Equable Institute Analysis: U.S. Public Pension Funds Close 2025 with Strong Returns

National funded ratio to reach 82.5% in 2025, but $1.27 trillion in unfunded liabilities remain

NEW YORK, Jan. 8, 2026 /PRNewswire/ -- Today, Equable Institute released a year-end update to its State of Pensions 2025 report. The analysis finds the aggregate funded ratio for U.S. state and local retirement systems are on track to improve from 78.0% in 2024 to 82.5% in 2025, based on data available through December 31^st, 2025. Equable Institute estimates that unfunded liabilities will total $1.27 trillion for the 2025 fiscal year, compared to $1.54 trillion at the end of 2024.

Strong market performance and record high contribution rates continue to drive positive funding trends in 2025. Preliminary investment returns average 9.5% for public pension plans, which is an overperformance compared to the average 6.9% assumed return target. However, there are negative trends on the horizon that pension funds should expect to navigate including state budget pressures and numerous potential recession indicators.

"The significant degree of financial uncertainty public pensions face going into 2026 has put a dampener on what would otherwise be a strong year for state and local retirement systems," Equable executive director Anthony Randazzo said. "Three consecutive years of growth has public plans in a much better position than in 2022, but still a fragile condition. As the tariff-driven economic shock of April 2025 demonstrated, there is no significant ability for public plans to avoid a major market downturn. The biggest thing to monitor in 2026 is how states will handle growing contribution rate pressures in the contexts of budget shortfalls."

To read the State of Pensions 2025 Year-End Update, access interactive data visualizations, and download raw data, visit: http://www.equable.org/stateofpensions2025.

About Equable Institute
Equable is a bipartisan non-profit that works with public retirement system stakeholders to solve complex pension funding challenges with data-driven solutions. We exist to support public sector workers in understanding how their retirement systems can be improved, and to help state and local governments find ways to both fix threats to municipal finance stability and ensure the retirement security of all public servants.

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SOURCE Equable Institute