The estimated aggregate funding ratio of multiemployer defined benefit plans in the U.S. reached 92% as of June 30, up from 88% at the end of 2020, according to a study from Milliman.
The first six months of the year continued a strong market recovery that had already brought funding levels to their highest ratio since Dec. 31, 2007, when the level was 85%.
The estimated investment return for Milliman's simplified portfolio was 6.9% for the six months ended June 30.
Nina M. Lantz, a principal at Milliman and co-author of the study, said the effects of the American Rescue Plan legislation have yet to be felt by the most critically endangered plans.
"The American Rescue Plan established a special financial assistance program for the most financially distressed multiemployer plans, which will improve their funding in the near term — but it remains to be seen whether this assistance can sustain these plans in the long term," Ms. Lantz said in a news release announcing the study.
The study notes that the Pension Benefit Guaranty Corp. estimates that about $94 billion in assistance will be paid to more than 200 plans through 2027.
"Furthermore, the effects of the COVID-19 pandemic are still emerging, and future contribution levels for most plans will depend on the resiliency of various industries to restore and/or maintain their employment levels," Ms. Lantz said.
Milliman estimated the market value of assets of plans in the study rose to $680 billion as of June 30, from $641 billion at the end of the year, an increase slightly offset by a rise in the estimated accrued benefit liability $740 billion from $732 billion during the same period.
The study is available on Milliman's website.