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Pension and Employee Benefits: Code, ERISA, & Regulations
Authoritative and comprehensive reference to pension and selected welfare benefit provisions of the I.R.C., ERISA and the associated regulatory authority.
from Spencer’s Benefits Reports: Investment losses throughout 2008 took their toll on multiemployer pension plans. In 2008, 80.2% of 237 multiemployer defined benefit plans were at least 80% funded (in safe status); while 11.0% were 65%-80% funded (in endangered status) and 8.9% were less than 65% funded (in critical status). For 2009, funded status decreased significantly: 20.7% were in safe status; 41.4% were in endangered status; and 37.9% were in critical status.
These were the findings in Multiemployer Pension Funding Status and Freeze Decisions, based upon interviews with 237 individual trustees and administrators conducted from April 13-17, 2009 by the International Foundation of Employee Benefit Plans. Only 85.7% of the 237 plans that reported their 2008 funding status were able to provide their 2009 funding status.
Short-term relief from the strictures of endangered or critical status was provided by he Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458), under which multiemployer defined benefit plans can adopt a one-year funding freeze. The one-year freeze option allows plans that were certified as safe for the 2008 plan year, but were certified as endangered or critical in 2009, to freeze their safe status for the 2009 plan year. In addition, plans certified as endangered for 2008, but critical for 2009, may freeze their status in 2009 using the endangered status that they had had in 2008.
The survey found that 28% of the surveyed plans had not yet decided whether to freeze their funding status using 2008 instead of 2009. Of those that had made a decision, 60.2% will freeze their status, 28.1% will not freeze their status, and 11.7% reported that such a decision was not applicable because their 2009 funding status was the same as their 2008 funding status.
Two of the top reasons for taking the one-year freeze involve a “wait-and-see approach”—waiting to see if investments will return and waiting to see if there will be any legislative relief from Congress. Another top reason for taking the one-year freeze was to allow more time to fix funding problems before solutions dictated by the Pension Protection Act of 2006 are required.
The great majority (70.8%) of the plans not electing the one-year freeze did not want to delay by another year the implementation of changes to improve their funding status. Nearly 30% of the plans did not elect the one-year freeze because they believed that a delay would only worsen their funding status and make finding a solution more problematic.
A majority of the multiemployer plans participating in the survey were in the construction industry (65.4%); followed by manufacturing/distribution (7.2%); retail/wholesale trade (6.8%); transportation (5.9%); and arts, entertainment, and recreation industries (4.2%). The majority of the plans surveyed (70.0%) had 1,000 or more participants, and 63.8% of the plans had assets of $100 million or greater.
For more information, visit http://www.ifebp.org.
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