New York (6/22/16) — Multiemployer retirement plans are making headlines for their financial troubles, but it is easy to lose sight of an important reality: A majority of plans are in the green zone, as confirmed by Segal Consulting’s latest Survey of Plans’ Zone Status.
Of the calendar-year plans in the survey (those with plan years that begin on January 1), 66 percent are in the green zone. The average Pension Protection Act of 2006 funding percentage of calendar-year plans has remained stable: 87 percent compared to 88 percent in 2015. “These results are particularly notable given the investment performance last year yielded just a 0.1 percent median return,” said Diane Gleave, senior vice president at Segal.
Other key survey findings include:
“Trustees of all plans should monitor industry conditions, employment levels and plan maturity in order to be prepared to respond as plan demographics shift,” added Ms. Gleave. “When assessing plan risks, they should look at measures beyond the funded percentage, such as cash flow, projected credit balance, contribution margins or deficits and potential employer liability.”
The survey includes data from more than 200 calendar-year plans from Segal’s client database, as well as almost 400 Segal client plans with zone certification filing deadlines between April 1, 2015 and March 31, 2016. 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.