Cheiron, a leading actuarial consulting firm, has provided a fresh perspective on the state of the multiemployer pension universe with a particular focus on those plans deemed to be in Critical and Declining (C&D) status. Here is the report.
As a reminder, Cheiron played a leading role in providing the critical analysis that was used to support legislative efforts surrounding the successful passage of the Butch Lewis Act in the House of Representatives earlier this year. It was their work that showed that 111 of 114 C&D funds at that time would benefit tremendously from a Federally provided low-interest rate loan through the Pension Rehabilitation Administration, the new agency that would be created under the BLA. Through this lifeline, these funds would be able to defease the Retired Lives liability, thus securing the promised benefits, pay the loan’s interest, meet future benefit liabilities, and repay the loan in year 30, while only needing a 6.5% annual return from the plan’s assets.
In their analysis from November 2018, the determined that 121 plans would soon fail relative to the 117 that they identified in this analysis. Unfortunately, the smaller number of failing plans is not reflective of an improved environment for these struggling plans as seven plans fell out of the analysis because they either failed or shut down. In this latest report, Cheiron determined that the 117 plans in danger of failing include roughly 1.4 million participants and have collectively $56.5 billion in unfunded liabilities. With each passing month, this funding issue becomes worse subjecting more American workers to an uncertain retirement.