Segal's Survey of Multiemployer Plans' Zone Status: Majority of Plans in Green Zone

New York (7/8/15) —  The key finding from Segal Consulting’s latest Survey of Plans’ Zone Status is that nearly two-thirds of calendar-year multiemployer pension plans are in the “green zone.”

The report shows that 65 percent of calendar-year plans (those with plan years that start on January 1) are in the green zone and the average Pension Protection Act of 2006 (PPA’06) funded percentage is 88 percent. The survey also shows positive news when plans are broken down by industry. The majority of plans are in the “green zone” in all but one industry, with the greatest percentage being construction (72 percent) and entertainment (71 percent). In general, plans in the green zone have a higher percentage of active participants, while plans in the red zone have a higher percentage of inactive participants.

“While most plans have not yet fully recovered from the impact of the market crash during the Great Recession, they are holding their own through a combination of increased contributions, benefit modifications and investment performance,” said David Blumenstein, senior vice president and national director of multiemployer consulting. “It is important to note that fewer than five percent of plans in the ‘green’ or ‘yellow zone’ were projected to be in the ‘red zone’ in the next five years.”

Senior vice president and multiemployer retirement practice leader Phillip Romello added: “In general plans are looking for ways to mitigate funding volatility, with some of the better funded plans looking at alternative defined benefit plan designs. Plans in ‘critical and declining’ status are in the early stages of assessing the applicability of the new tools afforded to them by the Multiemployer Pension Reform Act.”

The full survey includes data from more than 215 calendar-year plans from Segal’s client database, as well as almost 400 Segal client plans with zone certification filing deadlines between April 1, 2014 and March 31, 2015. A review of previous survey results of Segal clients, as well as Form 5500 reports for all multiemployer plans, indicates the number of plans in this study is a strong representation of multiemployer retirement plans across the country.  

To read the entire report, please click here.

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Segal Consulting (www.segalco.com) a member of The Segal Group, is a  leading, independent firm of benefit, compensation and human resources  consultants. Segal is headquartered in New York and has nearly 1,000 employees  throughout the U.S. and in Canada. Clients include corporations, non-profit  organizations, professional service firms, state and local governments and  joint boards of trustees administering pension and health and welfare plans  under the Taft-Hartley Act. On October 15, 2014, The Segal Group celebrated the  75th anniversary of its founding by Martin E. Segal.

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