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  • Writer's pictureLedbetter Parisi LLC

Retiree-Employee Ratios are Harming Multiemployer Pension Plans

In 2016, 10 multi-employer pension plans went insolvent and requested assistance from the PBGC. Bloomberg examined the Form 5500 data for these plans and found that seven of the plans had not had an active participant since 2013. However, this ratio is not unique to the 10 insolvent plans from 2016. According to nationwide data, the ratio of retiree and vested participants to active participants has increased from an average of 48% to 63% from 1995 to 2013. These disproportionate ratios are coupled with, and in some instances caused by, employers leaving the industry and subsequently withdrawing from multiemployer pension plans. Withdrawal liability is designed to insulate plans from the harsh consequences of employer withdrawal, however, employers often do not pay any or only pay some of the withdrawal liability owed to the plan, leaving the plan with a huge unfunded obligation.

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