In 2021, multiemployer pension plans faced continued financial market volatility as well as economic uncertainty surrounding the ongoing COVID-19 pandemic. Despite these challenges, most calendar-year multiemployer pension plans saw strong investment returns in 2021, resulting in improvements in their funding levels over the prior year. The percentage of plans in the green zone is near the level last seen just before the 2008 financial crisis.
According to the latest 2022 Segal survey of plan funding and zone status:
- The percentage of calendar-year plans in the green zone increased to 77 percent in 2022, up from 72 percent in 2021.
- The average Pension Protection Act of 2006 funded percentage for all calendar-year plans increased to 92 percent in 2022, up from 89 percent in 2021.
- For most plans, recent investment gains have not yet been fully recognized in the actuarial value of assets. The average funded percentage based on market value increased to 100 percent in 2022 for all calendar-year plans, 8 percentage points higher than on a PPA’06 basis. This is an increase from 93 percent one year earlier, mainly due to strong investment returns during 2021.
- Twenty-six calendar-year plans in the survey have already applied or are expected to apply for special financial assistance from the Pension Benefit Guaranty Corporation available under the American Rescue Plan Act of 2021.
What you’ll find in this survey — and why you should care
For trustees of multiemployer pension funds, there’s no greater challenge than navigating your plan through volatile periods. Knowing the details of how plans similar to yours have performed can provide a benchmark for your own plan’s performance.
The survey includes nearly 200 calendar-year plans that filed “zone status” certifications with the government in March 2022. That’s approximately one-half of all plans for which Segal is the actuary. As a group, these plans have more than $140 billion in assets, provide benefits to 2.5 million participants and represent nearly 25 percent of all participants in multiemployer plans.
This data, combined with the insight we’ve developed from decades of working with multiemployer pension plans, makes this report an invaluable tool for trustees.
This report includes insights on:
- The factors that influence changes in plan funding status
- The increase in the percentage of plans that are at least 100 percent funded
- The effect of asset smoothing on funding status
- Zone status by industry
- How well-funded plans improved benefits
- Plans’ “burn rates” — the rate of asset decline as a percent of total assets, without regard to investment income — by zone status
- The importance of monitoring risk to plan funding