The aggregate funded status for multiemployer pension plans was an estimated 77% as of Dec. 31, up from 76% as of June 30, Milliman said in its most recent multiemployer pension funding study released Monday.
Assets rose 3.6% over the six-month period to $488 billion, while liabilities rose 2.1% to $634 billion.
In the 12 months ended Dec. 31, a portfolio composed of 45% U.S. equities, 35% U.S. fixed income and 20% international equities returned 7.7%, Milliman estimated. The funded status for multiemployer plans as of Dec. 31, 2015, was an aggregate 80%.
“The gap continues to widen between critical and non-critical plans,” said Kevin Campe, Milliman principal, consulting actuary and co-author of the report, in a news release. “While the funding percentage of healthier plans has increased slightly, critical plans have seen no appreciable increase. Persistent strong returns would be needed to see any appreciable improvement in funded status.”
Milliman's report also found plans that are less than 80% funded are spending 50 cents of every contribution dollar on paying down funding shortfalls, 38 cents of each dollar on new benefit accruals and the remainder on operating expenses. On the flip side, plans that are more than 80% funded are spending 56 cents of every contribution dollar on new benefit accruals, 32 cents on paying down shortfalls and 12 cents on operating expenses.
Furthermore, Milliman found plans that are less than 80% funded are only paying down 6% of their funding shortfall in a given year, compared to 19% for plans that are more than 80% funded.
Results were derived from pension funds' Form 5500 filings; between 1,200 and 1,300 multiemployer pension funds were assessed. About 560 plans were less than 80% funded.