At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  Each year, we survey different independent investment advisors and ask them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Is my plan’s investment return assumption still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumption, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumption.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 23 investment advisors who participated in the 2014 edition of this survey.

The report on the results of the 2014 survey can be viewed below.

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                                    2014 Survey of Capital Market Assumptions
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This is the third edition of the survey for which we have published a report.  The 2013 edition of our survey can be found here, and the 2012 edition can be found here.

Horizon Actuarial Services, LLC has partnered with the International Foundation of Employee Benefits Plans to conduct a study of U.S. multiemployer defined benefit pension plans.  The study covers multiemployer plans in all industries, building upon the similar study of construction industry plans that Horizon Actuarial conducted with the Mechanical Contractors Association of America (MCAA) in 2012 and again in 2013.

The inaugural version of the report – The Multiemployer Defined Benefit Pension Plan Landscape: A Ten-Year Look (2002-2011) – is available at the International Foundation’s website at www.ifebp.org.

The report provides a look at historical trends for all U.S. multiemployer defined benefit plans for the ten-year period from 2002 to 2011.  It will help plan trustees, professional service providers, and policymakers gain a better understanding of these plans and their environment.

The report may also serve as a useful comparison tool, enabling trustees and advisors to understand how their plans compare with others with respect to demographics, cash flows, investments, and funding.

Horizon Actuarial and the International Foundation are working on a companion report focusing on multiemployer defined contribution pension plans; that report is scheduled to be released later in 2014.​

Please contact your Horizon Actuarial consultant if you have any questions.

The December, 2013 edition of the Benefits Magazine published by the International Foundation of Employee Benefit Plans includes two articles on liability-driven investing.  One article was written by Gordon Latter of Ryan Labs, and the other was written by Stan Goldfarb of Horizon Actuarial Services, LLC.

A copy of the Stan’s article can be downloaded via the link below.

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    Liability-Driven Investments – A Multiemployer Perspective

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The article was reproduced with permission from the International Foundation.  For the full December, 2013 edition of the Benefits Magazine, visit www.ifebp.org.​

Recent events — such as the bankruptcy of the city of Detroit — have increased discussion on how pension obligations are measured.  While most of the conversation has focused on public sector plans, many of the same pension funding concepts also apply to multiemployer plans.

The November, 2013 edition of the Benefits Magazine published by the International Foundation of Employee Benefit Plans includes an article that discusses two different approaches for measuring multiemployer pension obligations.  This article, “Setting the Pension Funding Target: Why Expected Return Matters,” was co-authored by Josh Shapiro of the National Coordinating Committee for Multiemployer Plans (NCCMP) and Cary Franklin of Horizon Actuarial Services, LLC.

A copy of the article can be downloaded via the link below.

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      Setting the Pension Funding Target: Why Expected Return Matters

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The article was reproduced with permission from the International Foundation.  For the full November, 2013 edition of the Benefits Magazine, visit www.ifebp.org.

At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  For each of the past four years, we have surveyed different independent investment advisors and asked them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Is my plan’s investment return assumption still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumption, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumption. Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 19 investment advisors who participated in the 2013 edition of this survey.

The report on the results of the 2013 survey can be viewed below.

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      2013 Survey of Capital Market Assumptions

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This is the second edition of the survey for which we have published a report.  The 2012 edition of our survey can be found here.

The Mechanical Contractors Association of America, Inc. (MCAA) and Horizon Actuarial Services, LLC (Horizon) have partnered to build an inventory of historical data for multiemployer pension plans in the construction industry. This inventory was built during the first half of 2012 using publicly available information from Form 5500 filings.

The purpose of this report is to summarize and analyze key trends in plan demographics, cash flows, investments, funding, and costs over the period from 2001 through 2010. By analyzing these trends, we can better understand how these construction industry plans have evolved over the past decade and where they may be headed in the future.

This report also examines plan investment fees and operating expenses for construction industry plans. If you are a plan trustee, you may find this section of the report useful as a comparison tool.

Finally, as an appendix, this report provides a listing of all of the construction industry plans included in the inventory. If you are an employer participating in one or more of these plans, the information in this listing will help you comply with the new multiemployer plan disclosures required by the Financial Accounting Standards Board (FASB).

The report can be viewed below.

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    Inventory of Construction Industry Pension Plans – 2012 Edition

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The report can also be viewed at the MCAA’s website.  This version includes an opening statement from the MCAA’s president.

At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  For each of the past three years, we have surveyed different independent investment advisors and asked them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Is my plan’s investment return assumption still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumption, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumption.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 17 investment advisors who participated in the 2012 edition of this survey.

The report on the results of the 2012 survey can be viewed below.

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2012 Survey of Capital Market Assumptions
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On May 15, 2012, The Wall Street Journal published an opinion piece called “The Union Pension Bomb.”  Not only was this article biased, but it was very misleading and contained some factual errors.

On May 17, we submitted a response to the WSJ outlining our disagreements.  A few days after that, we learned that the WSJ would publish an abbreviated version of our response, along with those of two other responders, the National Coordinating Committee for Multiemployer Plans (NCCMP) and the Western Conference of Teamsters Pension Fund.

Our original response to the WSJ editorial can be found in this Horizon Bulletin.  The abbreviated version of our response published by the WSJ and the other two published responses can be found on the WSJ website.
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If you have any questions or would like to discuss this issue, please contact your Horizon Actuarial consultant.

On November 26, 2010, the IRS released Notice 2010-83, which provides guidance on the special funding relief rules available to multiemployer pension plans under the Pension Relief Act of 2010.  This guidance had been anticipated since the Pension Relief Act was signed into law on June 25, 2010.

Notice 2010-83 is posted on the IRS website, along with a summary of its key provisions.  The guidance is presented in a question and answer format.  Notice 2010-83 follows Notice 2010-56, which was released on July 30, 2010 and contained preliminary guidance on the Pension Relief Act of 2010.

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Available for download is a HORIZON BULLETIN (updated December 13, 2010) summarizing the provisions of the Pension Relief Act of 2010 affecting multiemployer plans, reflecting the guidance provided by the IRS in Notice 2010-83.

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The following are key pieces of guidance provided by Notice 2010-83:
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• The 2008 and 2009 investment losses eligible for relief are determined on a market valuebasis, rather than the less favorable actuarial value basis, as some had feared.
• For plans electing relief, it appears the restriction on benefit improvements will range from three to twelve years, depending on how much of the available relief is utilized.  (The language of PRA 2010 hinted that the restriction might apply for as long as 32 years.)  Restrictions do not apply if the benefit improvements are funded through increased contributions or are required by law.  Further clarification on this issue may be needed.
• Plans can shorten the benefit increase restriction period at any time by opting out of relief prospectively, without losing the effect of the relief applied prior to opting out.
• The PPA certification status for the current plan year may be revised to reflect funding relief, but re-certification is not required.  (Any re-certification must be done before the end of the plan year to which the re-certification applies.)  Similarly, a plan may (but is not required to) update a previously-adopted funding improvement plan or rehabilitation plan to reflect the funding relief.
• Details are provided regarding the manner and timing of the relief election and the required notices to plan participants and the PBGC.  Generally, Trustees must make a formal decision to use the special rules by the earlier of the date of the 2011 actuarial certification or June 30, 2011.

On July 9, 2010, The Washington Examiner published an editorial by Mark Tapscott titled “Are you depending on one of these 108 worst-funded union pension plans?” Over the past several weeks, this editorial has gained some attention, and some parties have even distributed it to people covered under these pension plans.

It is true that many pension plans – both union and non-union – are facing challenges in the wake of the financial market collapse of 2008 and continuing poor economic conditions. However, The Examiner editorial uses misleading information to portray union pension plans as being worse funded than they actually are.
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This Horizon bulletin outlines the ways in which the information in The Examiner editorial (taken from a Moody’s report from September, 2009) is misleading.  A participant in a multiemployer pension plan who has questions regarding its funded status should contact the plan itself to receive better information.