The aggregate funded status for multiemployer pension plans improved slightly to 76% in the first six months of the year, up from 75% at the end of 2015, Milliman said in a multiemployer pension funding study released Friday.
The improvement represents a $1 billion decline in the overall funding shortfall for all plans.
Kevin Campe, Milliman principal, consulting actuary and one of six study co-authors, said in a statement that half of the total underfunding is attributable to roughly 300 plans that are less than 65% funded, which puts them in critical status. “About 40% of these critical plans are projected to be insolvent at some point,” Mr. Campe said. The study looked at between 1,200 and 1,300 plans, depending on several measurement dates. As of June 30, the aggregate market value of assets was $471 billion, and liabilities were $621 billion.
Most multiemployer plans estimated investment returns above 3% over the six-month period, slightly below expectations. The aggregate return for the rest of 2016 needs to stay at 3% in order to keep at the 76% funded level, Milliman said.
Since late 2007, multiemployer plans made progress in their funding levels, reaching 80% in late 2013. Since then, “plans have not been able to make additional progress” in their funded status, which is driven largely by investment returns, the study said.
The study is available on Milliman's website.