In the next 20 years, more than a million plan participants covered by 114 multiemployer plans could lose pension benefits, according to a recent study.
The actuarial consulting firm Cheiron has announced that it has found that those plans are underfunded by $36.4 billion — they collectively have assets of $43.5 billion, but liabilities of $79.9 billion. That puts almost 1.3 million workers at risk of not receiving their full benefits due to plan insolvency.
In accordance with the Multiemployer Pension Reform Act of 2014, the plans have notified regulators of their condition. That highlights the risks of the Pension Benefit Guaranty Corporation (PBGC)’s multiemployer pension plan insurance plan running out of money, which the PBGC currently warns could happen by 2025 — more than a decade before those 114 themselves do.
In a press release, Cheiron Principal Consulting Actuary Joshua Davis expressed concern that the failure of those 114 plans could have a domino effect. “Traditionally, participants in healthy multiemployer pension plans have been forced to pay for the guaranteed benefits of retirees and their families in failed plans. If this happens again, it will push other plans into insolvency with terrible consequences for communities across the country,” Davis said.
Chreiron attributes the situation to “a combination of factors,” including stock market losses during the Great Recession, declining industries creating more retirees than workers, and employers leaving the plans either through bankruptcy or by withdrawing from them, leaving the employers that are still part of the plan responsible for all unfunded liabilities.
The actuarial consulting firm Cheiron has announced that it has found that those plans are underfunded by $36.4 billion — they collectively have assets of $43.5 billion, but liabilities of $79.9 billion. That puts almost 1.3 million workers at risk of not receiving their full benefits due to plan insolvency.
In accordance with the Multiemployer Pension Reform Act of 2014, the plans have notified regulators of their condition. That highlights the risks of the Pension Benefit Guaranty Corporation (PBGC)’s multiemployer pension plan insurance plan running out of money, which the PBGC currently warns could happen by 2025 — more than a decade before those 114 themselves do.
In a press release, Cheiron Principal Consulting Actuary Joshua Davis expressed concern that the failure of those 114 plans could have a domino effect. “Traditionally, participants in healthy multiemployer pension plans have been forced to pay for the guaranteed benefits of retirees and their families in failed plans. If this happens again, it will push other plans into insolvency with terrible consequences for communities across the country,” Davis said.
Chreiron attributes the situation to “a combination of factors,” including stock market losses during the Great Recession, declining industries creating more retirees than workers, and employers leaving the plans either through bankruptcy or by withdrawing from them, leaving the employers that are still part of the plan responsible for all unfunded liabilities.
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