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Majority of multiemployer plans well funded; 9% 'critical and declining'

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A majority of multiemployer pension funds continued to be in the well-funded “green zone” in calendar year 2015, according to Segal Consulting’s latest Survey of Plans’ Zone Status released Wednesday.

As with 2014, 65% of multiemployer plans were in the green zone, which is at least 80% funded. The average funding ratio was 88%.

One new number in the 2015 survey refers to a new category of plan created by the Multiemployer Pension Reform Act of 2014: “critical and declining,” which are plans likely to run out of assets in 15 to 20 years. Of the 215 calendar-year plans that file annual reports for periods beginning Jan. 1, 9% were found to be critical and declining.

“It’s the first time they’ve been exposed to any of the testing. We knew that there were some plans that were running into the ground,” said Phillip Romello, senior vice president and multiemployer retirement practice leader at Segal.

The full survey includes data from more than 215 calendar-year plans from Segal’s client database, plus 385 Segal client plans with zone certification filing deadlines between April 1, 2014, and March 31, 2015.

Broken down by industry, construction and entertainment had the highest percentage of well-funded plans. Such plans typically have a higher percentage of active participants.

Industries with the highest percentage of red-zone calendar-year plans (typically less than 65% funded) were transportation, retail trade and food, services and manufacturing.

Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.