Tag Archives: Nina Lantz

Healthy multiemployer pension plans achieve best funding in a decade, but unhealthy plans continue to languish

Milliman today released the results of its Spring 2018 Multiemployer Pension Funding Study (MPFS), which analyzes the funded status of all multiemployer pension plans in the United States. As of December 31, 2017, the plans achieved an aggregate funded ratio of 83%, the highest since the market collapse in 2008; a decade ago, the aggregate funded ratio of all multiemployer plans stood at 85%.

While increases in plan contributions and reductions in benefits factored into these plans’ funding improvement, stellar investment returns were the primary driver of gains for the MPFS plans. The estimated 2017 calendar year investment return for our simplified portfolio was nearly 16%—more than double the assumption of most plans. Critical plans, however, were unable to capitalize on the sturdy investment returns due to the cash flow demands that hit less healthy plans.

While healthier plans benefited from better than assumed investment earnings, critical plans are sinking in quicksand and not able to benefit enough from strong investment returns. It’s been almost 10 years since the global financial crisis, and while healthier plans have gotten their funded status levels back to where they were then, critical plans have not.

Healthy plans have a funded ratio of 93%, compared with 90% a decade ago. Critical plans’ aggregate funded ratio as of year-end is mired at 60%, compared to 76% in 2008. A closer look at critical plans in the “red” or “deep red” zones show the contributions of mature plans (those with fewer active participants) are relatively small compared to the size of the plan’s assets and liabilities. The shortfall for red zone and deep red zone plans is expected to grow unless these plans experience superior asset returns, increased contributions, and/or benefit reductions.

To view the complete study, click here.

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

Multiemployer pension plans nearing healthiest funding since market collapse of 2008

Milliman has released the results of its Fall 2017 Multiemployer Pension Funding Study, which analyzes the funded status of all multiemployer pension plans. As of June 30, 2017, these plans are nearing the healthiest they’ve been since U.S. financial markets collapsed in 2008. In the first six months of 2017, the aggregate funding percentage for all multiemployer pensions climbed from 77% to 81%, reducing the system’s shortfall by $21 billion—an improvement driven largely by favorable investment returns.

In aggregate, asset growth for multiemployer plans far outpaced assumptions for the first half of 2017. But that bears little weight for critical plans, which are hurt by their substantially lower asset bases. Despite the bull market, we’re seeing the funding gap continue to widen between critical and noncritical plans.

While noncritical plans are nearing an aggregate funded percentage of 90%, the funding level for critical plans remains around 60%. Currently about a quarter of the plans tracked by Milliman’s Multiemployer Study fall within critical levels, with some of the most troubled on track to rely on assistance from the Pension Benefit Guaranty Corporation (PBGC)—which itself is facing severe financial challenges. Comparatively, of the approximately 1,250 plans analyzed in the study, around 75% are considered noncritical.

To view the complete study, click here.

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

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.

Tools for multiemployer pension plans in critical and declining status

The Multiemployer Pension Reform Act of 2014 (MEPRA) was part of the Consolidated and Further Continuing Appropriations Act of 2015, which was signed by President Obama in December. One of the major changes MEPRA has made is the creation of a new status for very poorly funded plans called “critical and declining status.” In this Multiemployer Review, Milliman consultants Robert Behar, Nina Lantz, and Victor Harte define this new status and outline major rules and procedures related to plan mergers, plan partitions, and benefit suspensions.

Multiemployer Review: Multiemployer Pension Reform Act of 2014

This Multiemployer Review summarizes provisions of the Multiemployer Pension Reform Act (MEPRA) that were included in the Consolidated and Further Continuing Appropriations Act of 2015 (P.L.113-235). The MEPRA provisions that apply to all multiemployer plans are discussed first, followed by provisions that impact plans depending on their Pension Protection Act (PPA) zone status (green zone or endangered status, endangered and critical status, and critical status).