According to a Multiemployer Pension Plan Management Rearch Panel poll, multiemployer pension plans appear healthy, as approximately 56% of plans that responded are at least 80% funded. But there's no denying that plans covering union members face a number of challenges compared to other pension plans including:
- Larger underfunded liabilities
- Lower contributions
- Lower expected returns
Fast fact: Trustees appear committed to not closing the plans to new hires or reducing benefits
Q: How are trustees managing these challenges?
A: They remain focused on maintaining overall plan health and ensuring their plans meet their targets.
Poll: Multiemployer Plans - Health and Challenges Faced
We asked trustees about their challenges. Many remain concerned and are looking for the best ways to manage the underfunded liabilities going forward. See how you compare to your peers' poll responses in these key are:
- Funded Status
- Nearly half (44%) of those polled said the current plan funded status is "endangered" or worse
- Trustees with plans currently in the red zone status are not entirely confident the plan will meet the targets in its rehabilitation plan
- Asset Allocation
- 62% of trustees polled are increasing contributions to alternative investment classes in an effort to improve overall health of the plan
- The pension has negatively impacted pay increases for participants
- Laws & Regulations
- Regulatory changes, such as the Multiemployer Pension Reform Act of 2014 have done more harm than good to multiemployers plans, according to 69% of poll respondents
Fast fact: Of the firms who use external resources, 83% either already use an external firm to provide some level of discretion or agree that it's worth evaluating using an OCIO during their next review.
In the third quarter of 2017, The Multiemployer Pension Plan Management Research Panel surveyed 46 trustees of multiemployer plans with assets ranging from $25 million to over $1 billion, none of which are SEI clients, to learn about some of the challenges they face. The poll findings reveal how Trustees feel about their plans health, certain outside factors that impact their plan, and efforts to improve the overall asset allocation and effectiveness in meeting goals.
Information provided by SEI Investments Management Corporation – a registered investment adviser and wholly owned subsidiary of SEI Investments Company.