A Segal news release about its 2007 survey said t he average withdrawal liability funded ratio is 84%, up from 81% last year (See Multiemployer Plan Funding Continues to Firm Up ) . Withdrawal liability is considered a financial stability indicator for a multiemployer plan.
According to Segal, its latest data also shows that 17% of the surveyed plans were fully funded (up from 14% in the 2006 survey). This represents the second year of improvement following the downward trend of the 2002-2005 survey
The average withdrawal liability funded ratios increased for plans in all industries, except the retail trade and food industry, which stayed flat, according to Segal. Plans in the entertainment and manufacturing industries had funded ratios that were equal to or better than 90% (94% and 90%, respectively).
The latest survey also shows, as in the previous three studies, the average withdrawal liability funded ratios were similar for plans of all sizes as measured by the number of participants.
Compared to plans in the 2006 survey, a larger percentage of plans in the 2007 survey made benefit improvements and a smaller percentage of plans reduced benefit accruals. In the 2007 survey, 23% of plans made benefit improvements, up from 19% in the 2006 survey. The percentage of plans that made benefit reductions dropped slightly from 11% in the 2006 survey to 10% in the 2007 survey.
According to Segal researchers, many boards of multiemployer plans are making decisions to improve their plans’ funding position as a result of the requirements of the Pension Protection Act, that will also likely positively affect the withdrawal liability funded ratio. Conversely, trustees of plans that have strong funded positions that have improved their plan benefits may have immediately lowered their plan’s withdrawal liability funded ratio at the time of the improvement.
The Segal Company, consultants, and enrolled actuaries for all of the plans in the survey, compiled the data by examining each plan’s actuarial present value of vested benefits as calculated for withdrawal liability purposes under the Multiemployer Pension Plans.
For the 2007 survey, Segal examined 402 plans. Those plans’ combined assets totaled almost $152 billion, an increase from $138 billion in the 2006 survey. The surveyed plans covered almost 3.5 million participants, which represents about 35% of all multiemployer plan participants.
More information about the 2007 data is available here .
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