Only 39% of 1,500 U.S. multiemployer plans were “well funded” as of the end of 2008, down from 83% at the end of the previous year, according to a Goldman Sachs report.
Many companies in the manufacturing, construction, trucking and retail industries, some of the hardest hit by the economic recession, “have significant exposure to these plans,” according to “The Hidden Crisis of Multiemployer Pension Plans,” written by Michael A. Moran, vice president, and Abby Joseph Cohen, managing director.
“Many investors remain ill-informed about multiemployer plans … which could impose significant liabilities, expense, and cash contribution requirements on some companies,” the report says. “These plans tend to be more underfunded than single-employer plans.”
“Accounting disclosures are often lacking” about multiemployer plans, the report says. “Investors are often provided with little information about multiemployer plan status even if the multiemployer plans are much larger than a company’s other retirement programs. Companies themselves often do not have complete and timely information on the plans in which they participate.”
The report didn’t provide funding values.
“The recent pressures faced by some companies with respect to their multiemployer plans, combined with investor frustration over lack of sufficient information on these plans, could spur the (Financial Accounting Standards Board) to consider reforms related to the accounting and disclosure for these retirement obligations.” the report said.
“We expect discussions on reforms to all facets of multiemployer plans — accounting, disclosure, and funding — to gain focus in the coming months and years,” the authors wrote in the report.