July 5, 2018
The possibility of using more conservative interest rates for valuing multiemployer plan liabilities has been raised in deliberations of the Congressional Joint Select Committee on Solvency of Multiemployer Plans. To determine the impact of such a change, Segal Consulting performed a detailed analysis of two national multiemployer plans. For each plan, we modeled three scenarios for discounting liabilities using lower funding rates. Our study illustrates that the increase in the necessary contributions to meet current funding standards would not be sustainable for either of the plans studied, both of which are currently considered healthy or on the road to good health. In fact, a change to a considerably lower discount rate would create a much greater pension crisis than the one that already exists.
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