Multiemployer Plans Are Predominantly in Green Zone

While some multiemployer plans are in poor shape financially, many more are doing just fine, according to an analysis from Segal Consulting. 

A strong majority of U.S. multiemployer retirement plans stand in the Pension Protection Act-defined “green zone,” according to Segal Consulting’s new survey of Plans’ Zone Status, meaning their financial outlook is healthy and they stand a good chance of paying out all benefits promised to participants and beneficiaries.  

According to Segal Consulting, of the calendar-year plans in the survey, or those with plan years that begin on January 1, two-thirds (66%) are in the green zone. The zone system was established by the Pension Protection Act of 2006 (PPA) and updated/continued by the Multiemployer Pension Reform Act of 2014 (MEPRA), which is part of the federal government’s 2015 omnibus funding bill.

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Segal Consutling explains that, following the creation of the zone system, a fairly significant number of multiemployer plans found themselves facing less-than-stellar rankings, a fact that naturally gained serious attention from trade media, concerned pensioners, legislators, etc. Still, research shows troubled plans remain in the minority and that overall, the funding picture is fairly good given where current interest rates and market returns are: “The average Pension Protection Act of 2006 funding percentage of calendar-year plans has remained stable: 87% compared to 88% in 2015.”

“These results are particularly notable given the investment performance last year yielded just a 0.1% median return,” adds Diane Gleave, senior vice president at Segal.

Other key survey findings show eight plans improved from yellow or red zone status to green-zone status due to actions taken to improve their own funding in the last several years. In contrast, five plans moved into the yellow or red zone, with three going from green to yellow and two from yellow to red, the research shows. 

“There is a clear correlation between plans in the red zone and the proportion of inactive plan participants,” Segal Consulting finds. “Plans that are in the red zone, and particularly those classified as critical and declining, have a much higher percentage of inactive participants than active participants. For example, for the 20 calendar-year plans in the survey that are in critical and declining status, 89% of participants are inactive.”

Overall, construction and entertainment industries have the highest percentages of plans in the green zone and the lowest percentages of plans in the red zone. More than half of plans in three industry groups are in the red zone: transportation, manufacturing and service.

“Trustees of all plans should monitor industry conditions, employment levels and plan maturity in order to be prepared to respond as plan demographics shift,” Gleave concludes. “When assessing plan risks, they should look at measures beyond the funded percentage such as cash flow, projected credit balance, contribution margins or deficits and potential employer liability.”

Additional findings are presented here as a sharable infographic.  

Employees Find Wellness Programs Ineffective

Although 59% of employees say benefits are “very important,” only 25% of them believe their employers’ health and wellness programs are effective, according to research by One Medical. 

Employee-benefits programs can go a long way in not only keeping workers healthy, but also keeping them happy, according to a new survey by One Medical.

Fifty-nine percent of respondents say employee-benefits programs are “very important” in determining how they feel about their jobs and employers. Thirty-six percent said benefits were “somewhat important” in making these decisions.

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The findings also showed benefits can be deal breakers for people looking at multiple job offers. Sixty-nine percent of respondents said they would choose one job over another if it offered better benefits. Moreover, employees seem to value benefits more than “perks.” The survey found two out of three people said they would rather have wellness benefits than perks.

Despite the draw of benefits programs, some employees said that companies are not doing enough to invest in their workers’ health and wellness. A majority of respondents (64%) believe that keeping employees healthy should be the main drive behind a company’s benefits program. However, 66% of employees believe their employers are more focused on managing costs. Forty-nine percent said they believe keeping employees healthy is a top priority for their companies.

Fifty-two percent of survey takers said their company is making sufficient investments in their wellness and preventive care, but only 25% believe their companies’ health and wellness programs are effective in making them healthier.

One Medical found that 82% of companies are providing medical insurance and about half are investing in health and wellness programs. Forty-six percent offer employee assistance programs, 40% offer on-site vacations, 31% deliver fitness benefits, 27% back workshops, and 21% provide on-site health screening.

One Medical’s research was gathered by surveying more than 1,000 full-time professionals across the U.S. about their opinions, desires and perceptions regarding their companies’ employee-benefits programs. Respondents worked for companies of all sizes spanning 20 different industries, according to One Medical. Their ages ranged from 16 through 60 and older. Survey takers were evenly split between men and women, the company said.

The survey’s full results can be found here.

 

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