Milliman, Inc., a premier global consulting and actuarial firm, 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% - 90%. However, there are at least 123 "critical and declining" plans that cover roughly 1.3 million participants, many of which 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," says Ladd Preppernau, a principal and consulting actuary at Milliman and co-author of the MPFS. "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."
Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information visit milliman.com.
SOURCE Milliman, Inc.