Despite double-digit investment losses in 2018, nearly one-third of multiemployer plans over 90% funded, but least-funded plans show little hope of recovery without help

Milliman today released the results of its Spring 2019 Multiemployer Pension Funding Study (MPFS), which analyzes the funded status of all multiemployer pension plans in the United States. Between June 30, 2018, and December 31, 2018, the aggregate funded ratio of multiemployer plans dropped from 81% to 74% largely due to poor investment returns. In 2018, estimated average returns for MPFS plans were approximately -5% (compared to investment return assumptions of 6% to 8%), resulting in asset losses ranging from 11% to 13% below expectations. The overall funding shortfall for these plans increased by $51 billion during the last six months of 2018.

But despite the double-digit losses, the study found that, as of December 31, 2018, the majority of U.S. multiemployer plans are much healthier than they were at the market’s low point in March 2009. The MPFS includes 1,251 plans covering 10.5 million participants; nearly one-third—or 383 plans—are at least 90% funded and another 288 plans are funded between 80% and 90%. However, there are at least 123 “critical and declining” plans covering roughly 1.3 million participants that are likely headed for insolvency absent Congressional action.

Despite 2018’s investment losses, it appears that the majority of multiemployer plans are positioned to absorb that experience and improve in the future. However, for about 10% of plans, even stellar asset performance is unlikely to right the ship. Most of these plans will need outside help from lawmakers or others in order to prevent insolvency.

To view the complete study, click here.

Also, to receive regular updates of Milliman’s pension funding analysis, contact us here.

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