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Navigating Market Volatility: Public Pensions Remain Resilient
Public pensions are uniquely positioned to weather the storm as they navigate the current market conditions.
By: Hank Kim, Executive Director & Counsel, NCPERSAt the beginning of April, a new record was set: the U.S. stock market shed $6.6 trillion in value as escalating trade wars sparked by the Trump administration's decision to implement widespread tariffs rattled investors.
As the markets continue to experience extreme volatility, headlines have leaned into the natural reaction to economic and geopolitical uncertainty: Fear.
Following the release of an April 2025 report from Equable highlighting questionable* claims that the top 25 state and local pension funds lost more than $249 billion in public equities, fear-based narratives have dominated much of the media coverage surrounding the public pension industry.
Much of this reporting, however, lacks crucial context.
Using a more reliable and consistent source—the Milliman 100 Public Pension Funding Index—we see that in March 2025 (the most recently available data), the top 100 plans experienced losses of $92 billion, or roughly 1.6 percent of their total asset value. While gains are of course the goal, the relatively modest decline in total asset value demonstrates why diversification is such a powerful risk mitigation tool for institutional investors.
Consider that in March 2025, the S&P 500 lost 5.75% of its total value. Had these same public plans been invested only in this index, as some tend to advocate for, they would have lost an additional $212 billion, or more than $304 billion total, that same month.
When we expand our view to consider the big picture, we see these plans had investment returns of more than $590 billion in 2024 alone. Looking back even further, it becomes clear that pensions are uniquely positioned to weather the storm as they navigate the current market conditions.
In less than 20 years, public pensions have successfully recovered from two major economic crises—the Great Financial Crisis and the COVID-19 pandemic. Following the Great Financial Crisis, which wiped nearly $8 trillion in value from the stock markets between late 2007-2009, the majority of public pensions were able to recover their pre-recession asset levels within six years. Further, state and local retirement systems took significant steps to ensure their resiliency going forward.
Thanks to the implementation of sound governance practices, effective portfolio diversification, and disciplined funding strategies, public pensions have seen continued improvements in fiscal performance. The average funded ratio recently reached a five-year high of 83.1 percent, according to NCPERS 2025 Public Retirement Systems Study.
Long-term fiscal stability does not happen by chance, though. With increasing political, budgetary, and economic uncertainty, it's more important than ever for public pensions to stay informed and connected to peers going through similar experiences.
In just a few weeks, more than 700 public pension trustees, staff, and industry stakeholders will gather in Denver for NCPERS Annual Conference & Exhibition to network and explore strategies to help navigate these challenges. It's not too late to register, and we hope to see you there.
If you're unable to attend, be sure to explore our upcoming in-person conferences to learn about the latest developments impacting our industry and learn how to protect and grow our pension systems. Throughout the year, NCPERS also hosts online learning opportunities and virtual roundtables to bring together leaders at public pension plans to ask questions and share resources with peers.
NCPERS is here as a resource during these uncertain times. Please do not hesitate to reach out to membership@ncpers.org with any questions about how we can support your organization.
*The report was published by Equable, a think tank known for producing research meant to perpetuate the idea that public pensions are unsustainable. The methodology did not capture actual changes in positions for Q1 2025.
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