A majority of multiemployer pension funds continued to be in the well-funded “green zone” in the third quarter, said Segal Consulting’s Survey of Plans’ Zone Status released Wednesday.
The survey found that 65% of multiemployer plans were in the green zone, which is at least 80% funded. Red-zone plans, typically less than 65% funded, accounted for 26% of the plans in the survey, but 49% of total participants, particularly in transportation and manufacturing industries.
The survey includes 75 plans with zone certifications filed in the third quarter of 2015 representing $50 billion in combined assets, and 384 plans filed between Oct. 1, 2014, and Sept. 30, 2015, representing $190 billion in assets combined. Those filing in the third quarter averaged 85% funded, while those with filing deadlines in the past 12 months averaged 87%.
The Multiemployer Pension Reform Act of 2014 created a new plan category, “critical and declining,” which are plans likely to run out of assets in 15 to 20 years that can take additional corrective actions, including eligibility to apply for benefit suspensions. One-third of the red-zone plans were classified as “critical and declining” in the survey. Those plans, representing half of red-zone participants, are beginning to assess the applicability of the law’s new tools, said David Blumenstein, senior vice president and national director of multiemployer consulting for Segal, in a statement.
“It is encouraging to see that nearly two-thirds of plans have consistently been in the green zone over the past few years,” Mr. Blumenstein said.
The survey is available on Segal’s website