Spring 2014 Report of Results from the Survey of Calendar-Year Plans’ 2014 Zone Status

Abstract

The Pension Protection Act of 2006 (PPA ‘06) divides multiemployer pension plans into three "zones": red ("critical" status), yellow ("endangered" status), and green (neither "critical" nor "endangered" status). This Survey of Calendar-Year Plans' 2014 Zone Status reports the percentage of plans in each category.

Four key findings follow:

  • In 2014, 65 percent of plans are in the green zone, up from 61 percent in 2013.
  • Plans in the yellow zone decreased from 11 percent in 2013 to eight percent in 2014.
  • Plans in the red zone fell by 1 percentage point between 2013 and 2014. 
  • The PPA'06 funded percentage rose from 85 percent in 2013 to 88 percent in 2014. This year, 26 percent of plans have a PPA'06 funded percentage of 100 percent or more.

Although some plans have seen improvements, funding challenges remain from the 2008 economic downturn. These challenges will require trustees to understand their plans' vulnerability to investment risk, employment risk and longevity risk.

The Survey of Calendar-Year Plans' 2014 Zone Status report presents findings and commentary about these and other survey findings. For example, it includes data on industry differences in the calendar-year plans' zone status between 2013 and 2014. It also provides background information about the zones and information about practical steps trustees are already taking, or may wish to consider taking, to improve their plans' future zone and overall funding status.

The survey data is based on actual certifications for almost 220 calendar-year multiemployer plans (all of which are Segal clients) that represent a wide range of industries from across the country with combined assets of almost $100 billion. The certifications took into account changes in plan design, employment outlook, negotiated contribution rates and investment performance through the end of 2013.

Segal Consulting has also created an infographic of the survey data.

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