New Report on Multiemployer Defined Benefit Pension PlansBondBeebe
Larry Beebe, CPA
A new report provides valuable information for all those involved in multiemployer defined benefit pension plans. It is a must-read resource and a helpful benchmarking tool for pension plans.
Published by the International Foundation of Employee Benefit Plans (IFEBP) andHorizon Actuarial Services, LLC, The Multiemployer Defined Benefit Pension Plan Landscape: A Ten Year Look (2002 – 2011) was compiled based on statistics taken from the Forms 5500 filed by the 1,385 multiemployer pension plans that existed at December 31, 2011. The primary authors of the report are Jason Russell and Cary Franklin of Horizon, as well as Julie Stich of the IFEBP.
As stated within the study, its primary purpose “is to summarize and analyze key trends in plan demographics, cash flows, investments, funding and costs of the ten-year period from 2002 through 2011.” A wealth of helpful details is included, such as the types and number of plan participants for all plans in the study, and a breakdown of industry type. Also included are graphs and charts showing plan contributions and disbursements, as well as investment returns, both actual and expected. Plans’ normal cost differences by industry and employer contributions data are presented in easy-to-read graphics.
The report’s funding analysis shows that multiemployer defined benefit plans have made a significant recovery since the bottom of the stock market in 2008. For example, the median funded percentage for multiemployer pension plans at December 31, 2008 was 67.4%. By December 31, 2011, the median funded percentage was 75.1%. Five percent of plans were 105.2% funded at end of 2011, and only 5% were less than 45% funded on that date.
The entertainment industry outpaced the median for all plans, while manufacturing and transportation industries were a bit lower. The majority of multiemployer plans are now much more stable, as evidenced by PPA plan status. As of 2011, 59.7% of plans were in the green zone, compared with only 35.5% for 2008. This increase in funded status was led by the service and construction industries.
A full copy of the report can be downloaded at www.ifebp.org/multiemployerpensionplans. The report is free to IFEBP members; nonmembers can download it for $195. Whether you administer a plan, act as a trustee, or are working within the industry in an advisory role, this is a valuable resource and helpful tool to more thoroughly understand industry dynamics and trends.