With several financially troubled multiemployer plans currently making headlines, it is easy to lose sight of the important reality that a majority of multiemployer plans are in the green zone, as confirmed by Segal Consulting’s latest Survey of Plans’ Zone Status. Moreover, the average Pension Protection Act of 2006 (PPA’06) funded percentage has remained stable: 87 percent for 2016 calendar-year plans (compared to 88 percent in the prior year).
What is particularly notable is that the calendar-year results are coming on the heels of 2015 experience in which investment returns fell short of expectations: the median investment return for the calendar-year plans was just 0.1 percent.
Nevertheless, while 64 percent of plans with zone certifications filed in the 12 months ending in March 2016 are in the green zone, this news should not obscure the fact that just under half of all participants are in plans in the red zone. Significantly, about half of these red-zone participants (23 percent overall) are in plans that are considered to be “critical and declining.”
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