Despite worries about their funding statuses, 66% of multiemployer plans are in the green zone, according to Segal Consulting.
They have an average funding of 87%, just slightly down from 88% last year. “These results are particularly notable, given the investment performance last year yielded just 0.1% median return,” says Diane Gleave, senior vice president at Segal.
The survey also showed that eight plans moved from yellow- or red-zone status to green-zone status due to improvements in their funding. On the other hand, five plans moved into the yellow or red zone (three moving from green to yellow and two from yellow to red).
Among the 20 plans currently in the red zone, 89% of their participants are inactive. The construction and entertainment industries have the highest percentages of plans in the green zone, while transportation, manufacturing and hospital, building and security services are in the red zone.
“Trustees of all plans should monitor industry conditions, employment levels and plan maturity in order to be prepared to respond as plan demographics shift,” Gleave says. “When assessing plan risks, they should look at measures beyond the funded percentage, such as cash flow, projected credit balance, contribution margins or deficits and potential employer liability.”