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Funding of multiemployer pension plans dips

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Multiemployer pension plan funding levels declined slightly in the first six months of this year, hampered by poor investment returns, according to a report released Friday.

The funded status of the plans dropped to 79% from 80% at the end of 2014, Seattle-based actuarial firm Milliman Inc. said in its Multiemployer Pension Funding study.

The nearly 1,300 multiemployer pension plans analyzed had $479 billion in assets as of June 30, down $1 billion from the end of last year, Milliman found.

Multiemployer pension plans continue to struggle as benefit payments and expenses far outweigh contributions, the study showed. Liabilities for accrued benefits increased by $7 billion, to $604 billion, in the first six months of 2015, raising the funding shortfall by $8 billion, according to the study.

“Multiemployer pension plans have not experienced the kind of equity returns hoped for this year, and recent stock market volatility has only compounded the funding challenges,” Kevin Campe, Milliman principal, consulting actuary and co-author of the study, said in a statement.

“We've added a new twist to this latest study, forecasting how various returns would affect funded status,” he said. “A strong six months of double-digit returns could push pension funding for multiemployer plans slightly over 87%, while a 7% decline would drop funded status below 72%.”

The study also showed that as of June 30, 279 multiemployer plans — 21.8% of all plans — were more than 100% funded, with an aggregate surplus of about $6 billion.

Still, many plans remain underfunded: 38% of plans were less than 80% funded as of June 30, Milliman found.

According to the study, the aggregated funded status of the plans has yet to return to the levels experienced before the 2008 financial crash though its has improved significantly since 2009.