Category Archives: Multiemployer

Multiemployer pension plans experience slight decline in funded status during the first six months of 2015, may face further funding challenges ahead

Campe-KevinMilliman today released the results of its Fall 2015 Multiemployer Pension Funding Study (MPFS), which analyzes the cumulative funded status of all U.S. multiemployer pension plans. These pension plans showed little movement in the last six months, dropping from 80% as of December 31, 2014, to 79% as of June 30, 2015.


The study noted that the market value of assets for all multiemployer plans decreased by $1 billion. The liability for accrued benefits grew by $7 billion and resulted in an increase in the funded status shortfall of $8 billion.

Multiemployer pension plans have not experienced the kind of equity returns hoped for this year, and recent stock market volatility has only compounded the funding challenges. We’ve added a new twist to this latest study, forecasting how various returns would affect funded status. A strong six months of double-digit returns could push pension funding for multiemployer plans slightly over 87%, while a 7% decline would drop funded status below 72%.

As of June 30, 279 multiemployer plans are over 100% funded, with an aggregate surplus of approximately $6 billion, unchanged from December 31, 2014. The shortfall for multiemployer plans less than 65% funded grew from $60 billion to $65 billion. This group now represents about 17% of all plans and continues to account for more than half of the aggregate deficit for all multiemployer plans of $125 billion.

The study also found that there has been significant recovery from the low point in 2009, but that the aggregate funded percentage has yet to return to pre-2008 levels.

Multiemployer Pension Reform Act of 2014 contributions for withdrawal liability

The Multiemployer Pension Reform Act of 2014 (MPRA) changes how certain employer contributions are handled when calculating withdrawal liability payment amounts. Plan administrators should review their systems and procedures regarding invoicing employees and/or retaining employer contributions so they can isolate certain contribution amounts excluded when calculating withdrawal liability. Milliman consultant Nina Lantz provides more perspective in this paper.

2014 a so-so year for most multiemployer plans

Campe-KevinMilliman today released the results of its Spring 2015 Multiemployer Pension Funding Study (MPFS), which analyzes the cumulative funded status of all U.S. multiemployer pension plans. These pension plans experienced little movement last year, slipping slightly from an 81% funded status at the end of 2013 to an 80% funded status at the end of 2014. As was the case in 2013, many mature plans are still struggling to recover from the financial crisis.


While the market value of assets for all multiemployer plans increased by $7 billion, the liability for accrued benefits outpaced these gains, growing by $12 billion and resulting in an increased shortfall of $5 billion.

People assume that the stock market recovery would be enough to push these multiemployer plans back to where they were in 2007, but it’s not that simple. Liabilities have been growing at 7.5% per year on average, which complicates a full recovery.

Approximately 15% of multiemployer pension plans are less than 65% funded as of December 31, 2014, and over half of the $117 billion aggregate shortfall for all multiemployer plans is attributable to these plans. On the positive side, about 22% of all multiemployer plans are over 100% funded.

The study notes that the recently enacted Multiemployer Pension Reform Act of 2014 provides new tools to the trustees of the most severely underfunded multiemployer plans.

To download a copy of the entire study, click here.

Multiemployer pension plans performed well in 2013 but many remain stuck in the mud

Campe-KevinMilliman today released the results of its inaugural Multiemployer Pension Funding Study (MPFS), which analyzes the cumulative funded status of all U.S. multiemployer pension plans. In 2013, these pensions were buoyed by strong investment performance—a $45 billion reduction in the funding deficit, which represents a 9% improvement in funded status.


On an aggregate basis, 2013’s strong market performance helped these plans return to funding levels similar to what they saw ahead of the global financial crisis. For plans in need of financial recovery, achieving full funded status will require returns in excess of assumed rates of return. More than half of all plans will need to earn an average of 8% or more per year over the next 10 years to reach 100% funding.

Not all of these multiemployer plans are suffering the same degree of underfunding. Our analysis found that 22% of these plans are better than 100% funded at the end of 2013. At the other end of the spectrum, 15% of these plans are less than 65% funded.

Plan maturity is a major contributor to these plans’ ability to respond to poor funded status, and the level of maturity can be measured by the ratio of active-to-total participants. Between 2002 and 2012, the overall percentage of active participants in these plans fell from 48% to 37%.

To download a copy of the entire study, click here.

New FASB rules on multiemployer plan disclosures: Where to find the information

We’ve previously touched on the changes introduced by the Financial Accounting Standards Board (FASB) relating to multiemployer plan disclosures. The new standard, Subtopic 715-80, requires additional disclosures by employers who contribute into multiemployer pension plans. For publicly traded entities, the changes must be complied with for fiscal years ending after December 15, 2011. For many employers, this means now is the time to begin gathering the newly required information.

The new requirements ask employers to provide a lot of detail concerning the pension plans they contribute to. Some of the information will be readily available within the employer’s own records, such as the amount of contributions made to each “significant” plan and to all plans in the aggregate, as well as the expiration dates of collective bargaining agreements. However, much of the rest needs to be gathered with a little bit of help from the plans themselves.

Most if not all of the rest of the information, however, has likely already been provided by the plans through various notices. Employers should be looking to all pieces of correspondence they have received from the pension fund office. Annual Funding Notices and 104(d) Notices are likely to be the most helpful, as these should contain information on the projected Zone Status and whether or not the employer’s contributions represent more than 5% of all contributions to the plan. 

The new requirement does not involve only data, however. Employers will need to provide some general narrative about the nature and risks involved with multiemployer plans. They’ll also need to disclose any material events that might affect comparability of periods reported. Lastly, there is judgment involved, as employers must decide what constitutes a “significant” plan.

The example provided in Accounting Standards Update 2011-09 is helpful and thorough, and sponsors may find additional helpful information here.

Year-end compliance issues for multiemployer plans

The latest issue of Multiemployer Review outlines key compliance issues as the year draws to a close. These considerations include:

  • Most multiemployer plans were affected by the Pension Protection Act and the 2008 Worker, Retiree, and Employer Recovery Act, both of which included required and discretionary plan amendments.
  • Plan sponsors may need to distribute a number of annual notices and benefit statements.
  • A new IRS form requires completion.

Read more here.