It Is A False Narrative!

There appears an article on the CIO Magazine website, titled, “Multiemployer Pension Funding Reaches Pre-financial Crisis Levels” followed by “double-digit asset gains boost aggregate funded ratio to 85% in 2019.” Wow, if only that were the case! The article, written by Michael Katz uses information produced by actuarial and consulting firm Milliman, which claims that more plans are above 100% funding in the multiemployer space than there were prior to the GFC.

Regrettably, it is a false narrative, although technically correct, to suggest that pension funding dramatically improved in 2019 for multiemployer pension plans. To suggest that there was an 11% increase in funding is outrageously misleading. U.S. interest rates, especially long-term interest rates, plummeted in 2019 driving liability growth (marked-to-market) higher and leading liability growth to exceed asset growth despite a very strong year for equity (and bond) markets.

It is this fallacy that continues to harm the long-term viability of pension systems. America’s pensions (public and multiemployer) are not in good shape, and pretending that they are because of accounting rules that allow pension liabilities to be discounted at the return on asset assumption (ROA) is reckless! We need an honest evaluation of our pension system so that important changes can be made to help protect and preserve them before they collapse.

Pretending that everything is hunky-dory is dangerous and ineffective. I would encourage you to refer to either the Ryan ALM Pension Monitor in the latest edition of P&I (2/24/20) or the quarterly Ryan ALM Newsletters that can be found at to see the latest truth on pension funding.

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