The United Association of Journeymen and Apprentices of the Plumbing, Pipefitting and Sprinkler Fitting Industry of the United States and Canada (United Association), Mechanical Contractors Association of America, Inc. (MCAA), and Horizon Actuarial Services, LLC have partnered to conduct a study of multiemployer pension plan benefit and contribution levels from the 1970s to today.

The purpose of the study is to educate policy makers about the significant actions that plans have taken to increase contributions, decrease benefits, or both, and to highlight the fact that current active participants are bearing the burden of these changes.

Maintaining active participation is crucial to the survival of multiemployer plans, and policy reforms that place additional, undue, burden on current active participants may further erode the system and diminish benefit security for current inactive vested participants, retirees, and beneficiaries.

The study uses a random sample of seven United Association Pension Plans to show that contribution rates have increased significantly over time while the value of the benefits provided has decreased over time.  These changes have disproportionately affected current active participants, and policy makers should be mindful of these inequities when considering potential multiemployer pension reform legislation.
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The report can be viewed below.

 ​The Joint Select Committee on Solvency of Multiemployer Plans (the “Committee”) was formed in Congress in February 2018 to address the issues facing multiemployer plans today. The Committee is comprised of eight members each from the House and the Senate, has equal representation from Democrats and Republicans, and is slated to propose legislation by November 30, 2018.
 
While the looming insolvencies of plans in critical & declining status and the Pension Benefit Guaranty Corporation (PBGC) have received most of the headlines, the Committee is also considering measures that would impact all plans – even healthy plans in the green zone. 
 
One of the measures under consideration is to mandate the use of discount rates based on corporate bond or treasury yields for minimum funding purposes. In our view, such a measure would dramatically overstate pension costs and is not in any way appropriate for multiemployer pension plan funding. 
 
In order to educate lawmakers on the devastating consequences this action would have for nearly all multiemployer plans, we prepared the following report and handout.

​As detailed in the report, the use of alternative discount rates would drastically increase unfunded liabilities, contribution requirements, and contribution volatility. The impact would be significant, and would likely lead to further destabilization of the entire multiemployer system.
 
Please contact your Horizon Actuarial consultant for more information on the report, the Committee, or how this may affect your pension fund.

​The Trustee Handbook: A Guide to Labor-Management Employee Benefit Plans, published in 2017 by the International Foundation of Employee Benefit Plans, includes a chapter on funding the pension promise from an actuarial perspective, written by Cary Franklin of Horizon Actuarial.
 
The chapter is a valuable resource for any Trustee seeking to better understand the actuary’s role in determining how pension plans are funded.  It also includes information about the various federal laws that provide the legal framework for multiemployer pension plan funding.
 
A copy of “Funding the Pension: An Actuarial Perspective” can be downloaded via the link below.

​The excerpted chapter was reproduced with permission from the International Foundation of Employee Benefit Plans (www.ifebp.org).  Copies of the entire book are available for purchase online, or by calling (888) 334-3327, option 4.

The July 2016 edition of the Benefits Magazine published by the International Foundation of Employee Benefit Plans includes an article on creating a funding policy, written by Cary Franklin of Horizon Actuarial Services, LLC.

A copy of Cary's article can be downloaded via the link below.
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                          Creating A Funding Policy

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The article was reproduced with permission from the International Foundation. For the full July 2016 edition of the Benefits Magazine, visit www.ifebp.org.​