Multiemployer defined benefits plans were hard hit by the recession. Funding levels took a deep dive post-2008 and the appearance of new plans dwindled as potential participants waited to see what the fallout would be.
Now, these plans, where more than one employer participates in a benefits package for employees, are recovering.
As plan trustees develop new strategies to strengthen plans, financial stability is returning. A 10-year study (2002-2011) by the International Foundation of Employee Benefit Plans and Horizon Actuarial Services identifies post-2008 trends that suggest plan managers learned from the recession and are taking steps to strengthen plans.
The Multiemployer Defined Benefit Pension Plan Landscape is, according to its sponsors, the first in-depth look at how these plans have performed over time. While the data does not paint a picture of the multiemployer model as poised for explosive growth in the near-term, it does suggest that more employers now view the model as a viable alternative for providing health insurance and other benefits for workers.
Among the new information developed by the study:
- 1,385 multiemployer defined benefit pension plans with net assets existed in 2011.
- Total assets of the plans were about $400 million.
- 10.4 million participants and their beneficiaries have coverage through these plans.
- More than half of multiemployer plans have fewer than 50 participating employers.
- Over the ten-year period, most plans saw decreases in the number of participants who are actively working and having contributions made on their behalf. There were increases in the number of non-working plan participants, such as retirees.
- Plan trustees have taken significant action to improve their plans’ funding levels in the wake of the 2008 market collapse. At the end of 2011, the median funded percentage was 75.1 percent, compared to 67.4 percent at the end of 2008. At the beginning of 2008, that number stood at 88.7 percent.
- The construction industry has the highest percentage of such plans at 58 percent of the total, with manufacturing and transportation as the next highest at 11 percent and 10 percent respectively.
- Plan disbursements have risen slowly but steadily over the period, from $3.9 million in 2002 to $5.7 million in 2011.
- Plan net investment returns have been uneven since 2008, when plans lost 23 percent. Since then, returns were 16 percent in 2009, 12 percent in 2010 and 1 percent in 2011.