The aggregate funding ratio for multiemployer pension plans reached pre-financial crisis levels as of Dec. 31, according to a study from Milliman.
The improvement to an aggregate funding ratio equal to the 85% funding level measured by Milliman before the financial crisis as of Dec. 31, 2007, was attributable to double-digit returns for the year, Milliman's latest Multiemployer Pension Funding Study shows.
The aggregate funding ratio of all U.S. multiemployer pension plans as of Dec. 31, 2018, was 74%.
Compared to the 2007 data, 39% of multiemployer plans have a funding ratio of over 100% compared to 26% of multiemployer plans 12 years earlier.
The percentage of plans with ratios of under 50%, however, has also increased, to 8% of all multiemployer plans, from 2% of all plans at the end of 2007.
"While about 130 plans continue on a path toward insolvency, the majority of non-critical plans have improved since 2007 and are at higher funding levels today," said Nina Lantz, principal and consulting actuary at Milliman and co-author of the study, in a news release. "In addition to investment performance, many plans are seeing funding levels increase due to benefit and/or contribution adjustments made during the past decade."
The study also shows that despite higher investment returns, those critical and declining plans in aggregate are still headed toward insolvency.
The study is available on Milliman's website.
