Running any pension plan entails challenges and has characteristics different from those of other retirement saving vehicles. But even among pension plans themselves there are variations.

Pension plans run by private-sector employers and those run by governmental entities for their employees share their ultimate purpose of providing dependable and predictable revenue to their covered retirees. Still, however, they do vary from each other.

One of the ways that private and public pension plans differ is in their funding status.

Private pension plans for the most part have been flush with cash for many years, at least as far as funding levels are concerned. Full funding and then some are the norm, and that’s not a recent phenomenon.

Public plans, on the other hand, are not as robust. The degree to which that is true depends in part on which jurisdiction the plan serves, how its economy is going, and other factors that affect its financial condition.

To wit: In its seventh annual report, the Equitable Institute said that the funded status of 45 states’ pension plans improved in 2026, not those of all 50. Further, they said that only seven have a funding level of 100% or more.

But variations from state to state notwithstanding, in general public pension plans are not funded as fully as their private-sector counterparts. The Equitable Institute paints it in rather stark terms, reporting that almost 60% of public pension plans “remain fragile or distressed.”

Private Sizzle

It’s been a hot summer in much of the country, but heat has not been reserved for the great outdoors. Private-sector pension plans have been in an extended heat wave for a long time.

Like the mercury in many places that exceeded the century mark in June this year, so too funding levels for private-sector pension plans exceeded 100% according to multiple analysts.

October Three, which tracks the performance of two hypothetical plans — one traditionally invested, one conservatively invested — plan, said that the former stood at approximately 107%, and the other around 101.5%. Other analyses reported similar findings, and some even higher levels than October Three’s traditional plan:

• • • MetLife: 105.7%
    • Aon: 106.7%
    • Wilshire: 108.7%
    • Milliman: 109.5%
    • L&G Asset Management: 110%

There was growth in spring, too. For instance, Aon reported a funding level of 105.2% in April and 106.4% in May, spelling growth of 1.2 percentage points; Milliman showed a 108.2% funding level in April and one of 109.6% in May, improvement of 1.4 percentage points.

A look a one year hence illustrates the longevity of high funding levels.

Milliman reported a funding level for the pension plans it monitors of 104.3% in June 2025, and 109.5% one year later, an increase of 5.2 percentage points:

• • Aon, which tracks the performance of pension plans operated by the S&P 500 showed a funding level at the end of June 2025 of 101.3%, and an increase of 5.3 percentage points to 106.6% at the end of June 202; and
  • Wilshire showed the greatest one-year increase of all: private pension plan funding of 100.6% on June 30, 2025, and 108.7% on June 30, 2026, a change of +8.1 percentage points.

So, too, two years before:

• • Aon showed an aggregate funded ratio for the S&P 500 DB plans of 101% in June 2024;
  • Wilshire reported a private-sector funded level of 102.3%; and
  • October Three said that by the end of June 2024, its conservative plan stood at 102% and its traditional plan had a funded ratio of just over 108%.

Public Slow Boil

Public-sector pension plans have not experienced such a heat wave. Recent research quantifies the aggregate performance of public pension plans — and also the disparity between the performance of the two kinds of DB plans.

In its seventh annual report, the Equitable Institute showed that the largest 253 statewide and municipal retirement systems in the United States in June 2026 had an aggregate funded ratio of 85%.

While the public plans’ funding level and that of private-sector entities were dissimilar, with private-sector pension funding exceeding that of public-sector plans, the public-sector pension plans the Equitable Institute tracks share the steady improvement that analysts reported concerning private DB plans.

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