WASHINGTON - The majority of multiemployer plans are fully funded, a survey by The Segal Co. shows.
The average funded ratio is 95%, according to Segal's 1995 Survey of the Funded Position of Multiemployer Plans. What's more, 82% are at least 90% funded, and 93% are at least 80% funded.
Of the 475 plans surveyed, 65% were fully funded for 1993 and 1994 plan years, a 12 percentage point drop from Segal's last survey, said Robert Krinsky, Segal's chairman. This decline was mostly due to interest rate drops and slower growth rates, he said.
The survey's findings have prompted Segal executives to suggest that Congress consider increasing the guarantee level for multiemployer plans.
That level, fixed since 1980, is capped for a retiree with 30 years of service at just under $6,000 per year. By comparison, the maximum guarantee in the single-employer program for a 65 year-old retiree is about $31,000 per year.
Meanwhile, Pension Benefit Guaranty Corp. Executive Director Martin Slate said earlier this month that doubling the current guarantee limit would not be harmful to the agency.
The PBGC's research shows its multiemployer program had a $197 million surplus in 1994, with assets of $378 million and liabilities of $181 million. In the 15 years since the law governing multiemployer plans was enacted, only 13 plans have required assistance; payments totaled $24 million.
When Congress passed the Multiemployer Pension Plan Amendments Act of 1980, many became concerned about multiemployer plans' funding levels, mostly because this law requires withdrawing employers to pay a share of the plans' promised but unfunded vested benefits.
"This concern has, to a great degree, been put to rest since funding levels have remained high," Mr. Krinsky said.
Multiemployer plans should be looked at separately from single employer plans, simply because they have healthy funded ratios and few plan terminations, Mr. Krinsky said. Congress should increase current guarantee levels because of their good record and of the PBGC's surplus, he added.