New York (1/19/17) — The latest Survey of Plans’ Zone Status from Segal Consulting shows that a majority of multiemployer plans are still in the green zone.
The survey found 64 percent of plans are in the green zone while the percentage of plans in the red zone remained stable at 25 percent. These numbers are virtually unchanged compared to data for the previous 12-month period.
“The median investment return for clients who filed certifications in the 12 months ending on September 30 was just 0.01 percent, but despite the low returns the number of plans in the green zone remained stable,” commented Diane Gleave, senior vice president with Segal.
The survey also looks at how much multiemployer plans have improved since the time of the global financial crisis in 2009, when only 38 percent of plans certified to be in the green zone. “The gradual increase in the percentage over recent years is in part a result of the actions taken by trustees in their Rehabilitation and Funding Improvement Plans,” said Ms. Gleave.
Another key historical finding was that just under half the plans currently in critical and declining status were in the red zone before the global financial crisis, and may not survive without application for and approval of benefit suspensions or partitions under the Multiemployer Pension Reform Act.
“Going forward,” Ms. Gleave added that “trustees should monitor other measures beyond zone status. This includes cash flow, contribution margins or deficits, and the impact of potential employer withdrawals, so that they can take appropriate measures to manage risks.”
The survey presents the most recent data available for all Segal multiemployer client plans based on zone certifications filed in the 12 months ending in September 2016. The plan data includes 376 plans covering 3.8 million participants with combined assets of nearly $184 billion. A review of data from Form 5500 reports for all multiemployer plans indicates that Segal clients’ zone status by number of plans are representative of that universe as a whole.
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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 has more than 1,000 employees throughout the U.S. and in Canada. Clients include joint boards of trustees administering pension and health and welfare plans under the Taft-Hartley Act, state and local governments, corporations, non-profit organizations and professional service firms.
The Segal Group (www.segalgroup.net) is a private benefits, compensation and investment consulting firm with more than 1,000 employees throughout the U.S. and Canada. Members of The Segal Group include: Segal Consulting, Sibson Consulting, Segal Select Insurance Services, Inc. and Segal Marco Advisors.