February 25, 2016
By Timothy L. Connor, FSA, EA, MAAA and Paul R. Bonsee

In the last issue of this newsletter, we mentioned five key plan issues that are facing multiemployer plan sponsors, administrators and fiduciaries. Number one on that list was the impact of plan asset performance during 2015 and the direction of the financial markets in 2016. Markets were volatile in 2015, and that trend is continuing into the New Year. This is a signal to trustees that the impact of any underperformance on the projected zone status of their plan has to be understood and should be measured often.

Recent History- The majority of multiemployer plans were more than 85% funded prior to the 2008 financial crisis, having recovered from the prolonged market declines of the early 2000’s. The brutal investment climate of 2008-2009 had a severe negative impact on virtually all US retirement plans, including multiemployer defined benefit arrangements. Despite some recovery and improvement in performance from the worst of 2009, the aggregate funding percentage of multiemployer plans has not yet returned to where they were prior to 2008.

Where We Are Now- While aggregate funding levels have drawn closer to pre-crash levels, the 2008-9 crisis affected individual plans in different ways. Some plans have fared better than others in recovering, due in part to a more successful investment strategy, increased contributions, benefit modifications or some combination of all three. However, many multiemployer plans continue to battle the head winds of increasing benefit payments and expenses that exceed contributions. Good investments are of limited help for mature plans with large amounts of underfunding, particularly when assets must be liquidated to make benefit payments to deserving members.

What Is To Be Done- Trustees, plan administrators and fiduciaries need to know exactly where they are now to get where they want to finish. The first step is identifying the plan’s zone status today and its potential status under a range of economic and demographic scenarios. Once this has been explored, they can begin to sort through the range of options available, from benefit and contribution modifications, to asset allocation revisions, plan mergers and recent regulatory changes such as the Multiemployer Pension Reform Act of 2014.

For more information, please access the link below or contact Paul Bonsee at


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