A 3.5% aggregated investment loss spurred by war in the Middle East wiped $233 billion from the 100 largest U.S. public pension plans in March, dropping their funded levels to 83.7% from 87% in February, according to actuarial and consulting firm Milliman.

It was the first time the dataset recorded investment losses in more than a year, and it halted the progress of the aggregate funded level’s steady rise from almost 80% funded 12 months earlier. Milliman estimated that individual plans’ investment returns ranged from a loss of 5.2% to a loss of 0.5%.

March’s downturn pushed eight of the 100 plans below the 90% funded level, leaving 38 plans above that mark as the end of the month, down from 46 at the end of February, based on the Milliman 100 Public Pension Funding Index. The number of plans with funded levels ranging from 60% to 90% rose to 51 from 43 the previous month, while the number of plans with a funded level less than 60% funded remained unchanged at 11.

Milliman attributed the loss to the “geopolitical shock” from the U.S. and Israeli attacks on Iran, which have resulted in related conflicts throughout the Middle East. That shock followed the “highwater mark” in funded status for the Milliman 100 Public Pension Funding Index in February.

The firm provided forecasts for the plans’ future funded ratio based on three possible scenarios. The baseline scenario assumes 7% investment returns, while an “optimistic” scenario assumes investment returns 7% higher than the baseline and the “pessimistic” scenario assumes returns are 7% lower than the baseline. Milliman forecasted that under the baseline and optimistic scenarios, the plans’ funded ratio will rise to 85.4% and 91.1%, respectively, by the end of March 2027, but projects that it will drop to 79.8% under the pessimistic scenario.

Meanwhile, the asset value of the 100 public plans fell to approximately $5.73 trillion during the month from $5.94 trillion in February. This was comprised of a market value loss of approximately $208 billion and net negative cash flow of approximately $8 billion. As a result, the deficit between the estimated PPFI plan assets and liabilities widened during the month to $1.12 trillion from $884 billion at the end of February.

Milliman also reported that the total pension liability—the gross amount owed to employees based on past service—continued to grow, reaching an estimated $6.843 trillion as of the end of March from $6.826 trillion one month earlier. The firm noted total pension liabilities grow over time with interest and as active members accrue benefits. Liabilities shrink as benefits are paid.

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