Archived Insight | May 7, 2021

The Pandemic’s Impact on Multiemployer Pension Plans

With a global pandemic and financial market volatility, 2020 was an unprecedented year. Despite the turmoil of the past year and future economic uncertainty, most calendar-year multiemployer pension plans saw little change in their funding levels from January 1, 2020 to January 1, 2021.

This survey includes nearly 200 calendar-year plans. That’s approximately one-half of all plans for which Segal is the actuary. As a group, these plans have more than $125 billion in assets, provide benefits to nearly 2.5 million participants and represent approximately 25 percent of all participants in multiemployer plans.

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Key findings

According to the latest Segal survey of plan funding and zone status:

The average funded percentage for all calendar-year plans increased to 89 percent in 2021, up from 87 percent in 2020.
On average, the percentage of calendar-year plans in the green zone increased to 72 percent in 2021, up from 70 percent in 2020.
For plans in critical and declining status (projected to become insolvent) in both years, the average funded percentage declined to 31 percent in 2021, from 35 percent in 2020.
As part of the annual zone-status certification, plan trustees must provide input on their expectations for future industry activity and contribution levels. Overall, trustees of most plans had slightly lower expectations for short-term industry activity, but the same or similar expectations over the long term.
The majority of plans in the entertainment, manufacturing and retail, trade & food industry reduced both short-term and long-term workforce expectations.
For the construction and transportation industries, there was no clear trend on expected industry activity versus the prior year, despite economic uncertainty for 2021 and beyond.

The survey doesn't take into account the temporary relief provisions for multiemployer pension plans under the American Rescue Plan Act of 2021 (ARPA) but we discuss those provisions in the report.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.