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Pension Funds

Multiemployer plans healthiest since 2008, Milliman finds

Multiemployer pension plans are the healthiest they have been since 2008, according a funding study released by Milliman on Friday.

Milliman's Fall 2017 Multiemployer Pension Funding Study looked at the funded status of all multiemployer pension plans and found that in the first half of 2017, the aggregate funding percentage improved to 81% from 77% as of Dec. 31.

The improvement was largely due to good investment returns that outpaced return assumptions. The estimated return for a simplified portfolio of 45% domestic equities, 20% international equities and 35% U.S. fixed income was 7.6% for the six-month period. Milliman used market asset values for the analysis.

The improvement reduced an overall funding shortfall by $21 billion, down to $125 billion. However, the gap between healthy plans and those in critical funding condition "continues to widen," the study said.

While non-critical plans have an aggregate funding level near 90%, the figure for critical plans remains at 60%. "The substantially lower asset base of critical plans in relation to their liabilities requires much stronger asset returns for these plans to see improvement in their funded percentages," said the report.

The report used data from the Department of Labor Form 5500 as of August 2017. It is available on the Milliman website.