Segal: Majority of Multi-employer Plans Expected to Hit PPA Funding

April 26, 2007 ( - About 40% of multi-employer plans are considered either "endangered" or in "critical status" in regard to meeting the funding requirements of the Pension Protection Act, according to a recent survey by Segal.

The Segal survey of 410 plans is linked to the Pension Protection Act’s requirement that trustees of multi-employer plans must begin reviewing their funding status on an annual basis. Even though the PPA doesn’t require this review until 2008, Segal says that most trustees of these plans are already asking their actuaries to perform the funding calculation mandated by the law.

According to the survey, the funded status of multi-employer plan are as follows:

  • 58% of multi-employer plans are predicted to meet the PPA’s funding requirements;
  • 28% are “endangered,” meaning they are less than 80% funded, or will have a projected minimum funding deficiency within seven years.
  • 16% are considered in “critical status,” meaning they are less than 65% funded, and have either a projected funding deficiency within five years or an inability to pay benefits within seven years. Or this may mean a projected deficiency within four years, or inability to pay benefits within five years, regardless of funded status, Segal said.