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Segal survey finds most multiemployer plans still healthy

The number of multiemployer plans in the well-funded “green zone” was unchanged in the year ended Sept. 30, while plans in the worst shape grew slightly, according to a survey released by Segal Consulting on Wednesday.

Green-zone plans are defined as at least 80% funded and red-zone plans are typically less than 65% funded.

As of Sept. 30, 64% of plans surveyed were in the green zone, 11% were in the yellow zone and 25% were in the red zone. The figures as Sept. 30, 2015, were 64%, 10% and 26%, respectively.

Within the red-zone plans, 10% were considered critical and declining, up from 9% a year earlier. Nearly half of those plans were in the red zone even before the financial crisis, and may need approval to reduce benefits or partition their plans in order to survive, Segal said.

Diane Gleave, Segal senior vice president, noted in a statement that the green-zone plans remained stable despite median one-year investment returns of 0.01% for the plans surveyed, but said that, “going forward, trustees should monitor other measures beyond zone status. This includes cash flow, contribution margins or deficits, and the impact of potential employer withdrawals, so that they can take appropriate measures to manage risks.”

The survey also shows how multiemployer plans have improved since 2009, when only 38% were in the green zone, in part because of actions taken by trustees in rehabilitation and funding improvement plans, Ms. Gleave said.

The survey covers 376 plans with 3.8 million participants and combined assets of nearly $184 billion, which represents all Segal multiemployer client plans based on zone certifications filed in the 12 months ended Sept. 30.