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UA/MCAA Analysis of the Cost Impact of the Grassley/Alexander Proposal

12/13/2019

 
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 an analysis of the multiemployer pension reform proposal released by Senators Charles E. Grassley (R-IA) and Lamar Alexander (R-TN) on November 20, 2019.

This analysis focuses on two key changes in the proposal – increases in PBGC premiums and limitations on discount rates, and their implications for UA multiemployer plans. Each of the proposed changes would significantly increase contribution requirements.  The report also opines on the proposed changes to the calculation of employer withdrawal liability.
​
The report can be viewed below.
UA/MCAA Analysis of the Cost Impact of the Grassley/Alexander Proposal

Please contact your Horizon Actuarial consultant if you have questions about the report or how the proposal might impact your plan.

The Multiemployer Pension Recapitalization and Reform Plan

11/22/2019

 
On November 20, 2019, Senators Charles E. Grassley (R-IA) and Lamar Alexander (R-TN) released a proposal to address the immediate financial challenges faced by a subset of multiemployer pension plans and also to secure the multiemployer pension system over the long term — the “Multiemployer Pension Recapitalization and Reform Plan.”  The proposal generally follows the outline of the reform principles considered by the Joint Select Committee in November, 2018. 

​While the proposal does provide significant relief for some of the most troubled multiemployer plans via enhanced liability partitions to the PBGC and increases in PBGC guaranteed benefits, it also imposes strict funding standards that would be harmful for participants and employers in the majority of plans that are likely to remain healthy under current law.
 
Our high-level summary of the proposal is linked below.
Summary of Grassley/Alexander Pension Reform Proposal

​Please contact your Horizon Actuarial consultant for more details including an analysis of how the proposal could affect your plan.

The Multiemployer Health Plan Landscape: A Ten-Year Look (2007-2016)

10/14/2019

 
Horizon Actuarial Services has once again partnered with the International Foundation of Employee Benefits Plans to conduct a study of U.S. multiemployer health plans.  The study covers multiemployer health plans in all industries and the plans in the study have more than five million covered participants.  

The full report – The Multiemployer Health Plan Landscape: A Ten-Year Look (2007-2016) – is available at the International Foundation’s website (link below). The report provides a look at historical trends for U.S. multiemployer health plans for the ten-year period from 2007 to 2016.  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, benefit costs, income, cash flows, and more.

Selected highlights from the report are as follows:

  • The median cost of benefits for multiemployer health plans increased by 54% over the ten-year period from 2007 to 2016.
  • Over the same period, the number of covered retirees increased by 22%, while the number of active participants increased by only 1%.
  • Despite these trends, the financial condition of many of the 1,560 multiemployer health plans has improved.

This is the third edition of the report.
​
Please contact your Horizon Actuarial consultant if you have any questions.
The Multiemployer Health Plan Landscape: A Ten-Year Look (2007-2016)

2019 Survey of Capital Market Assumptions

8/19/2019

 
At Horizon Actuarial, we are retirement and healthcare 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 seek input from our colleagues in the investment advisory community.  Each year, we survey different 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: “Are my plan’s investment return assumptions reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumptions, such as its asset allocation, the maturity of its participant population, and the purpose of the measurement.  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 assumptions.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 34 investment advisors who participated in the 2019 edition of this survey.

The report on the results of the 2019 Survey can be viewed below.
2019 Survey of capital market assumptions
This is the eighth edition of the survey for which we have published a report. Prior editions can be found below:
2018 survey
2017 survey
2016 survey
2015 survey
2014 survey
2013 survey
2012 survey
 

The Multiemployer Retirement Plan Landscape: 2018 Edition

8/2/2019

 
Horizon Actuarial Services 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 originally conducted with the Mechanical Contractors Association of America (MCAA) in 2012.

The report – The Multiemployer Retirement Plan Landscape: A Fifteen-Year Look (2002-2016) – is available at the International Foundation’s website (link below). The report provides a look at historical trends for U.S. multiemployer retirement plans for the fifteen-year period from 2002 to 2016.  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.

This is the fifth edition of the report to include information on multiemployer defined contribution (DC) retirement plans, as well as multiemployer defined benefit (DB) pension plans.
​
Please contact your Horizon Actuarial consultant if you have any questions.
The Multiemployer Retirement Plan Landscape: 2018 Edition

Multiemployer Pension Plan Reform Policy Issues

6/26/2019

 
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.
​
The report can be viewed below.
Multiemployer Pension Plan Reform Policy Issues

The Multiemployer Retirement Plan Landscape: 2017 Edition

10/23/2018

 
Horizon Actuarial Services 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 originally conducted with the Mechanical Contractors Association of America (MCAA) in 2012.

The report – The Multiemployer Retirement Plan Landscape: A Ten-Year Look (2006-2015) – is available at the International Foundation’s website at https://www.ifebp.org/store/Pages/horizon-retirement-report. The report provides a look at historical trends for U.S. multiemployer retirement plans for the ten-year period from 2006 to 2015.  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.

This is the fourth edition of the report to include information on multiemployer defined contribution (DC) retirement plans, as well as multiemployer defined benefit (DB) pension plans.
​
Please contact your Horizon Actuarial consultant if you have any questions.

2018 Survey of Capital Market Assumptions

8/24/2018

 
At Horizon Actuarial, 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 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: “Are my plan’s investment return assumptions reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumptions, 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 assumptions.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 34 investment advisors who participated in the 2018 edition of this survey.

The report on the results of the 2018 Survey can be viewed below.
2018 Survey of Capital market assumptions
This is the seventh edition of the survey for which we have published a report. Prior editions can be found below:
2017 Survey
2014 survey
2016 Survey
2013 survey
2015 survey
2012 survey

The Impact of Alternative Discount Rates on Multiemployer Pension Plan Funding

6/25/2018

 
 ​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.
Discount rate report
One-Page Summary 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.

Inventory of Construction Industry Plans: Fifth Edition

4/13/2018

 
The Mechanical Contractors Association of America, Inc. (MCAA) and Horizon Actuarial Services, LLC have partnered to build an inventory of historical data for multiemployer pension plans in the construction industry.

The purpose of this inventory is to summarize and analyze key trends in plan demographics, cash flows, investments, funding, and costs over a ten-year period, from 2006 through 2015. 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.

As an appendix, the report  provides detailed results by trade within the construction industry, as well as a separate section containing exhibits specific to plans co-sponsored by MCAA employers and the Plumbers and Pipefitters.  This report also 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 or on MCAA's website.
inventory of construction industry pension plans:  fifth edition
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​In Memory of Brian Dailey
  • Home
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