U.S. multiemployer pension plans’ liabilities are increasing faster than the plans can make contributions to them, the Society of Actuaries said in a new report.
The SOA analyzed the most recent available Department of Labor Form 5500 filings among the approximately 1,300 multiemployer plans from 2009 through part of 2014 and said in 2013, liabilities totaled somewhere between $115 billion on a “PPA Zone Determination Basis” (the PPA is the Pension Protection Act of 2006) and $500 billion on a current liability basis, measured using Treasury rates and the market value of assets, said Lisa A. Schilling, retirement research actuary at the Society of Actuaries, in a telephone interview.
During that time, aggregate employer contributions increased an average of 6.9% per year, but liabilities are still increasing.
“The vast overwhelming majority of these plans are contributing way more than they have to,” Ms. Schilling said. “They’re far exceeding what they have to be doing. If you really look, for a whole lot of these plans, the contributions that they’re actually making aren’t even enough to pay the interest of the unfunded (liabilities).”
While contributions have been increasing, and significantly exceeding legally defined minimum required contributions, the margin declined between 2009 and 2013. In 2009, aggregate contributions were 8.75 times the aggregate minimum required contributions, but by 2013 the aggregate contributions were only two times the minimum.
The analysis is available on the SOA’s website.