Multiemployer defined benefit plans in the construction industry saw some improvement in funding levels in the past 10 years, but continue to struggle with shifting demographics, said a new report by the Mechanical Contractors Association of America and Horizon Actuarial Services.
The analysis looked at 803 plans with total assets of $213 billion in the 10-year period through 2012. Over that time, most plans reported decreasing numbers of active participants and increasing numbers of retirees, “resulting in greater reliance on investment returns to grow or preserve asset values,” the report said. The median annualized return over the turbulent period was 5.9%, up from 3.9% in the 10-year period that ended one year earlier.
The median funding percentage of 78% by 2012 was a “significant improvement” over the 67.6% at the end of 2008, “but still far short” of the 86.3% measured at the beginning of 2008. (In 2003, the median funding ratio was 80.3%.) The percentage of plans in a healthier “green zone” — those at 80% funded or better — increased to 59.4% from 38.5% during the 10-year period, which the authors credit to investment gains and trustees’ actions to improve funding levels.
MCAA officials are pushing for immediate congressional action that would allow them to take further actions in 2015 to rebalance risks, costs and remedial burdens on current stakeholders. “Any further delay makes problems worse,” said MCAA General Counsel John McNerney.