Multiemployer Pension Plans Faced Rough Investment Year in 2018
Milliman, a major American consulting and actuarial firm, recently released their dreary analysis on the state of multiemployer pension plans. While most plans have improved since 2008, market losses hindered improvement in 2018. The estimated investment return for 2018 was -5%, much lower than most plans' assumptions of 6% to 8%. In the last six months of 2018, the aggregate funding shortfall of multiemployer pension plans increased from $125 billion to $176 billion.
One year of negative investment return can have a huge impact on the future health of plans, especially plans in critical and declining status because they have less time and ability to recover before slipping into insolvency. Critical and declining plans likely won't be able to bounce back from 2018's poor investment performance by relying on positive investment performance in the coming years. Therefore, without Congressional action, it is becoming more and more likely that many of these plans will become insolvent.