October 8, 2018

2018 Segal Study of Multiemployer Plans in the Red Zone

Can the Most Troubled Multiemployer Pension Plans Recover?

According to Segal’s Study of Multiemployer Plans in the Red Zone, it looks unlikely without federal assistance.

The tools and remedies currently available to critical and declining (C&D) red-zone plans appear insufficient for recovery. That’s why the work of the Congressional Joint Select Committee on the Solvency of Multiemployer Plans is so important.

C&D plans leave both active participants and retirees at risk of reduced benefits.

For a full picture of the impact, download our report.

 


Average Market-Value Funded Percentage Based on 2010 Zone Status and Percentage Point Change

 

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We Analyzed Red-Zone Plans Over 10 years. Here’s What We Found

For plans that were in the red zone in 2010, there was a double-digit increase for non-C&D plans status compared to a double-digit decrease in the average market-value funded percentage of plans in C&D status.

We also found that:

  • Characteristics of C&D plans include a high retiree and inactive-to-active ratio and a high “burn rate” (the rate of asset decline, without regard to investment income).
  • Over the last 10 years, most red-zone plans have taken corrective actions. As a group, they have increased the average contribution rate by more than 50 percent and have reduced adjustable benefits for more than 80 percent of participants.
  • Some red-zone plans have emerged into the yellow or green zone. Many others are on the road to recovery. C&D plans, however, are not recovering.

Questions? Get in Touch

It’s important to understand your plan, its status and strategies for improvement.

Segal can help. Just get in touch.

Contact Segal ›

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David Brenner

David Brenner

SVP, National Director of Multiemployer Consulting

Dave Dean

Dave Dean

SVP, Multiemployer Retirement Practice Leader

Diane Gleave

Diane Gleave

SVP and Actuary

Eli Greenblum

Eli Greenblum

SVP, Chief Actuary

Tammy Dixon

Tammy Dixon

VP and Actuary