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CCH® PENSION — 6/1/11

Funding Status Of Multiemployer Plans Slowly Improving

from Spencer’s Benefits Reports: The average funded percentage of multiemployer plans increased slightly to 89% for plan years ending Dec. 31, 2010, compared with 86% for plan years ending Dec. 31, 2009, according to the Segal Company. However, the percentage is much lower than the 97% funded percentage for plan years ending Dec. 31, 2007.

Recovery from the economic downturn of 2008-09 has been slow, as reflected in the at-risk status of multiemployer plans, as defined by the Pension Protection Act of 2006 (PPA). The percentage of the plans in the critical category (plans under 65% funded) has slowly declined to 24% as of Dec. 31, 2010, compared with 30% of the plans as of Dec. 31, 2009, and 32% of the plans as of Dec. 31, 2008. Only 7% of the plans were in the critical category as of Dec. 31, 2007.

The percentage of plans within the “endangered” category (plans funded from 65% to 80%) has returned to the same level as before the economic downturn: 10% of the plans were in this category as of Dec. 31, 2010, as well as Dec. 31, 2007. This is compared with 16% of plans as of Dec. 31, 2009, and 29% of the plans as of Dec. 31, 2008.

Funding for plans in the “green” zone (plans funded 80% and above) also has improved, but is still well below the 83% of the multiemployer plans surveyed that were in this category as of Dec. 31, 2007. Segal found that 66% of the plans were in the green zone as of Dec. 31, 2010, compared with 54% of the plans as of Dec. 31, 2009, and 39% of the plans as of Dec. 31, 2008.

A breakdown by industry reveals that the plans in the construction industry are in the best shape while the plans in the transportation industry are in the worst shape:

Segal gathered statistics from 230 calendar year multiemployer plans. For more information, visit http://www.segalco.com.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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