Segal Viewpoint, a position paper on "The Enduring Importance and Appeal of Multiemployer Defined Benefit Plans"

Abstract

In recent years, pension plans have become the subject of increased scrutiny and public debate. The Segal Company is concerned that the unique characteristics and strengths of multiemployer defined benefit (DB) plans have been overlooked because corporate plans have received the lion's share of attention. This Segal Viewpoint position paper, "The Enduring Importance and Appeal of Multiemployer Defined Benefit Plans," aims to correct this imbalance.

After an introductory discussion of the sort of questions that self-examining trustees of multiemployer funds are increasingly asking, in regards to the long-term viability of their (DB) plans, the paper presents a brief overview of the history of multiemployer plans. It then examines factors behind the contraction in the number of corporate DB plans and explains why circumstances are fundamentally different for multiemployer DB plans. The enduring importance and appeal of multiemployer pension plans - to the employers and unions that sponsor them, as well as to participants - is explored in some detail.

The Segal Viewpoint answers the following questions:

  • When, why and how were multiemployer pension plans established?
  • What's behind the DB-to-defined contribution (DC) shift among employers that sponsor corporate plans?
  • How do circumstances differ for sponsors of multiemployer DB plans?
  • What other characteristics of multiemployer DB plans make them attractive to employers?
  • Why are multiemployer DB plans so appealing to workers?

This Segal Viewpoint also presents additional information on multiemployer DB plans in the form of sidebar articles, graphs and tabular data.

The paper concludes by noting that it is important to keep in mind that corporate DB plans and multiemployer DB plans are very different. The circumstances affecting corporate plans generally do not apply to or have the same effect on multiemployer plans. The inherent strengths of multiemployer DB plans have enabled them to adapt and endure. Because of their proven resilience, the outlook for multiemployer DB plans is positive and they will continue to play an important role in providing retirement security for millions of American workers, retirees and dependents.

As needed, The Segal Company will publish Viewpoint papers that take a position on important issues that affect our multiemployer clients.

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