Multiemployer pension plans' overall funding climbed to 87% as of June 30, up from 79% at the end of 2022, according to the Multiemployer Pension Funding Study released by consulting and actuarial firm Milliman on Tuesday.
The study, which analyzes the funded status of all multiemployer defined benefit pension plans in the U.S., found that the funding shortfall for all such plans fell by about $65 billion, resulting in an aggregate funded percentage of 87% as of midyear 2023.
Milliman also said that by midyear, about 45 plans received nearly $50 billion in special financial assistance, which increased the aggregate funded percentage by about 6%. Excluding the SFA, the aggregate funded percentage would be about 81%, an increase driven by an estimated investment return of 6.3% for the first six months of 2023.
Most plans that received SFA up to this point were insolvent or going insolvent in the near future, Milliman noted in the release. Plans that are not in critical and declining status have largely recovered from the 2008 global financial crisis and continue to weather the ups and downs of the market, the study added.
"The funded status of most plans will continue to be influenced primarily by investment returns," said Tim Connor, a principal at Milliman and co-author of the study, in the release."The plans that receive SFA may be able to pursue new strategies that weren't feasible before thanks to a boosted funded percentage. With nearly 30 years of expected solvency ahead of them, these plans can consider a merger with another plan or changes in plan design that may improve their chances to extend solvency indefinitely."