Only 10% of Multiemployer Plans Are in Critical and Declining Status

The latest survey from Segal Consulting shows only 10% of multiemployer retirement plans are in critical and declining status, with most plans in the green zone.

Data based on 2017 certifications filed through September 30 shows nearly two-thirds (64%) of multiemployer plans are in the green zone as defined by the Pension Protection Act (PPA), meaning they are at least 80% funded. However, the Multiemployer Pension Reform Act (MPRA) provides that plans that would otherwise be in the yellow zone can remain in the green zone if projected to move back into the green zone without the benefit of a remedial funding improvement plan, Segal notes. Twelve percent of plans are in the yellow zone, and 14% of plans are in the red zone, considered critical status.

Segal also found nearly one-quarter of plans are more than 100% funded, and more than more than half of plans in the survey have a funded percentage between 73% and 99%. Fewer than 7% of plans have a funded percentage of less than 50%.

Segal notes that in the construction industry, a greater percentage of plans with fewer than 1,000 participants are in the red zone than larger plans based on a distribution of the zone status for more than 200 Segal clients by number of participants. However, only six plans in this industry are in critical and declining status in 2017.