The estimated aggregate funding ratio of multiemployer defined benefit plans in the U.S. jumped to 89% as of Dec. 31, from 79% at the end of 2022, according to a Milliman study.
The increase in funding ratio was largely the result of continued special financial assistance funding approved by the Pension Benefit Guaranty Corp. under the American Rescue Plan Act of 2021.
In 2023 alone, a total of 34 multiemployer plans received nearly $54 billion in special financial assistance.
"While SFA provides significant help to plans in dire financial condition, it is not necessarily a permanent solution. These plans must continue to monitor and manage the ongoing risks mature pension plans face," said Timothy Connor, a principal and consulting actuary at Milliman and co-author of the study, in a Feb. 21 news release. "With the SFA, however, some of these plans may now have options that were not available to them before, such as merging with a better-funded plan, or exploring alternative plan designs, funding and investment policies."
Milliman's assumed asset portfolio also posted a positive return of 11% for the year ended Dec. 31. Without the SFA, the estimated aggregate funding ratio would have still been up from the previous year at 84%, the news release said.
As of Dec. 31, Milliman estimated a total of $720 billion in multiemployer pension plan assets, up from $618 billion the year before, while liabilities totaled $807 billion, up from $784 billion the year before.
The complete study is available on Milliman's website. Calculations are based on publicly available IRS Form 5500 data filed by more than 1,200 plans.
