Data on Multiemployer Plans

The Congressional Research Service came out with a report on Multiemployer Defined Benefit Plans based on 5500 data.

Highlights:

Using 2013 data, PBGC estimated that 79% of participants in multiemployer plans that were receiving financial assistance receive their full benefit (e.g., their benefits were below the PBGC maximum guarantee). Among participants in plans that were terminated and likely to need financial assistance in the future, 49% of participants have a benefit below the PBGC maximum guarantee, and 51% have a benefit larger than the PBGC maximum guarantee.

In the public-use Form 5500 data, 1,267 plans with 10.7 million participants filed Schedule MB in 2015. Among participants in these plans that filed Schedule MB in 2015about 38.3% were active participants (working and accruing benefits in a plan); about 28.5% were retired participants (currently receiving benefits from a plan); about 27.5% were separated, vested participants (not accruing benefits from a plan, but owed benefits and will receive them at eligibility age); and about 5.7% were deceased participants whose beneficiaries are receiving or are entitled to receive benefits. In 2015, multiemployer DB plans that filed Schedule MB had $477.7 billion in assets and owed participants $1,038.0 billion in benefits, resulting in total underfunding of $560.3 billion.

That $560 billion underfunding amount is based on RPA interest rates which averaged about 3.51% in 2015 while the liabilities used for funding and zone status averaged about 7.5%. This means that a lot of plans in the Green Zone could be in as much trouble as plans in Critical status depending on the creativity of the actuary. For example, this plan is in the Green Zone with a funded ratio (using an 8% valuation interest rate) of 76.8%:

Plan Name: Motion Picture Industry Pension Plan
EIN/PN: 95-1810805/001

Total participants @ 12/31/16: 84,389 including:

  • Retirees: 17,696
  • Separated but entitled to benefits: 14,878
  • Still working: 51,815

Asset Value (Market) @ 1/1/16: $3,185,363,000
Value of liabilities using RPA rate (3.28%) @ 1/1/16: $9,487,346,000 including:

  • Retirees: $3,096,704,000
  • Separated but entitled to benefits: $1,042,962,000
  • Still working: $5,347,680,000

Funded ratio: 33.57%
Unfunded Liabilities as of 1/1/16: $6,301,983,000

Asset Value (Market) as of 12/31/16: $3,394,468,832
Contributions 2016: $309,099,090
Payouts 2016: $287,320,136
Expenses 2016: $26,366,271

There is also a list of Employers who contribute at least 5% to particular plans with UPS topping the list by a lot:

3 responses to this post.

  1. Posted by Tough Love on August 8, 2018 at 8:56 am

    Yup, in your example, the “official” funding ratio of 76.8% drops to 33.57% when using more reasonable/conservative rates ………….. just like PUBLIC Sector funding ratios would drop if “properly” valued.

    E,g, NJ’s PFRS has an “official” funding ratio of about 70%. What would it be if “properly” valued ?

    Moody’s understands this, which is why in recent articles it has been pointed out how transferring PFRS control to their Unions (even with the controls put in place to make it difficult for the Unions to RAISE benefits or LOWER worker contributions) it was a BAD decision, because pension “reform” really means that we need to DECREASE the level of the benefits now granted, and the Unions sure won’t be amenable to doing that.

    ——————————————

    There is ZERO justification for a Taxpayer-funded MEP Bailout. Payouts to individual MEP participants in failing Plans should NEVER exceed the PBGC maximum as now structured.

    Reply

    • I totally understand where you are coming from. One MEP that causes me issues is the one that went under Federal receivership and the federal judge and his toady Receiver bankrupted it. THAT is an MEP that I would bail out because those employees had no choice; the Gov BK’ed their MEP. Maybe not 100 cents on the dollar (like Bush and Obama did with AIG to keep Goldman Sachs in the black, and super profitable), but 60-80 cents on the dollar would not bother me in that case. I cannot recall the name of it for some reason. If anyone remembers please post it. Driving me insane not recalling the name…

      Reply

  2. That $560 billion underfunding amount is based on RPA interest rates which averaged about 3.51% in 2015 while the liabilities used for funding and zone status averaged about 7.5%
    Swell! Someone has to be an adult in this Country and stop this fraud/graft/scamming/con/nonsense/whatever you want to call it. But REAL discount rates and real ROI should be mandatory. Like bad medicine that will cure the patient, it tastes nasty and none wants to take it, but the alternative is death.

    Reply

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