Milliman: Multiemployer pension funding ratios drop slightly in 2014
Published: March 18, 2015 - Pensions & Investments
The aggregate funded status of U.S. multiemployer pension plans fell slightly
to 80% in 2014, down one percentage point from the end of 2013, as liabilities
rose faster than assets, said a report from Milliman.
Assets rose to $480 billion as of Dec. 31, up 1.5% from the prior year, while
liabilities rose 2.1% to $597 billion, Milliman estimated.
gPeople assume that the stock market recovery would be enough to push these
multiemployer plans back to where they were in 2007, but itfs not that simple,h
said Kevin Campe, principal and consulting actuary at Milliman and co-author of
the report, in a news release. gLiabilities have been growing at 7.5% per year
on average, which complicates a full recovery.h
The recovery has been harder for more mature plans whose benefit payments and
plan expenses often outweigh contributions, the report said. Prior to the 2008
financial crisis, multiemployer pension plans were more than 85% funded.
To reach full funded status in the future, more than half of the pension
funds analyzed will have to achieve returns of 8% or more per year over the next
10 years, Milliman estimated
It remains to be seen how funding levels for severely underfunded plans will
be affected by the 2014 Multiemployer Pension Reform Act enacted in December,
the report added.
The new law allows some troubled multiemployer plans to adjust benefits to
keep the plan solvent. It also raised the annual Pension Benefit Guaranty Corp.
premiums that multiemployer plans must pay to $26 per participant from $13 and
made permanent the provisions of the Pension Protection Act of 2006 that were
scheduled to expire Dec. 31.
Mr. Campe could not immediately be reached for additional information.
Results in Millimanfs report were derived from pension fundsf Form 5500
filings; between 1,200 and 1,300 multiemployer pension funds were assessed.
Original Story Link: http://www.pionline.com/article/20150318/ONLINE/150319866/milliman-multiemployer-pension-funding-ratios-drop-slightly-in-2014