The estimated aggregate funding ratio of multiemployer defined benefit plans in the U.S. fell to 80% as of June 30, down from 91% at the end of 2021, according to a study from Milliman.
The fall in the estimated aggregate funding ratio during the first six months of 2022 was driven primarily by an estimated investment return of -12.3% for the period, according to Milliman's Mid-Year 2022 Multiemployer Pension Funding Study.
The study further says that the funding ratio would have been 79% if not for the PBGC's Special Financial Assistance Program under the American Rescue Plan Act of 2021. According to the study, the SFA has paid out $6.7 billion to plans in critical and declining status.
"The key factor impacting the future funded percentage of critical and declining plans will be the amount of SFA they receive and how that is managed over time," said Nina Lantz, a principal at Milliman and co-author of the study, in a news release. "The total impact of SFA on multiemployer pensions will depend on a variety of factors including the timing of the SFA payments, potential changes in plan liability measurements, and future investment returns."
The PBGC estimates that about $82 billion in assistance will be paid to over 200 plans, and most eligible plans must wait to apply for assistance until March 11, 2023. Milliman did not have an updated aggregate funding ratio for critical and declining plans, which had been 32% as of Dec. 31.
In the new study, Milliman estimates $617 million in assets as of June 30, down from $692 million as of Dec. 31, and accrued benefit liabilities of $771 million, up slightly from $761 million six months earlier.
The complete study is available on Milliman's website. Its estimates are based on complete 2019 IRS Form 5500 filings.
