Public pensions rebound

New report indicates improved funding among plans nationwide

By Michael Pramik, Ohio Public Employees Retirement System

Aug. 13, 2026 – The newly released State of Pensions 2026 report from the Equable Institute indicates that public pension systems across the United States have entered their strongest position in more than a decade. After years of volatility, the report shows steady improvement in funding levels, investment performance and long‑term stability.

According to Equable, the national funded ratio has risen to 85 percent, the highest level since 2009. The improvement reflects both strong market returns and sustained employer contributions. Public plans collectively reduced their unfunded liabilities to $1.13 trillion, down from $1.37 trillion the previous year. The report states that this reduction marks one of the most significant year‑over‑year improvements since the Great Recession.

Investment performance played a key role. Plans earned approximately 9.4 percent, surpassing their assumed return rate for the fourth consecutive year. Equable attributes the gains to diversified portfolios that have benefited from broad market growth. While the report acknowledges risks associated with valuation‑priced assets and concentrated holdings in large companies, it states that recent returns have strengthened overall system stability.

Employer contributions also increased. Plans received 31.8 percent of payroll from employers, the highest rate on record. The report states that a substantial portion of these contributions continues to address legacy pension debt, but the rising funded ratios suggest these payments are having the intended effect. Equable says improved funding positions give states and municipalities more flexibility to manage future obligations.

The report places these developments within the broader context of retirement security for public workers. Equable’s companion Retirement Security Report finds that full‑career workers continue to receive strong benefits from traditional pension plans. As funding improves, the report suggests that states may have greater capacity to modernize benefit structures for short‑ and medium‑term workers, who historically have been less well served by existing plan designs.

Equable also identifies emerging trends in pension investment strategies. The report notes increased exposure to artificial intelligence‑related companies and a growing share of assets held in private equity and other valuation‑priced investments. While these trends introduce certain risks, Equable states that they have contributed positively to recent returns and may continue to do so if markets remain stable.

Overall, the State of Pensions 2026 report indicates that public pension systems are stronger and more stable than they’ve been in years. Funding levels have improved, liabilities have decreased and investment performance has exceeded expectations. The report concludes that while challenges remain, particularly in ensuring equitable retirement outcomes across all worker groups, the national pension landscape is on firmer footing than at any point in the past decade.

Public pension systems serve millions of workers nationwide, and their stability is central to long‑term fiscal planning. The latest findings from Equable indicate that these systems are moving in a positive direction, supported by strong returns, steady contributions and improving financial fundamentals.