The financial status of multiemployer, jointly-trusted pension plans has dispersed among three zones—green, yellow, red—in 2009, where the green, or financially healthy zone, has been noticeably deserted by struggling plans. Where once in 2008, 80% of plans were in the green (based on their pre-freeze zone status), in 2009 only 38% of plans thrived in the verdant ‘safe’ zone.
The average Pension protection Act of 2006 funded percentage for the surveyed pension plans was 82% in 2009, down from 93% in 2008, finds a recent survey of 360 jointly-trusted (that is, labor and management) multiemployer pension plans, clients of the survey’s conductor, The Segal Company.
On the deflated side of the spectrum, 30% of plans were in the red zone in 2009, up significantly from 9% the year prior. Approximately the same amount (33%) was in the yellow zone last year, up from 11%.
Also uncovered in the survey, almost three-quarters of the pension plans allowed to take advantage of a one-time opportunity to freeze their zone status decided to do so.
“The significant change in zone status from 2008 to 2009 is directly related to the investment meltdown that occurred in 2008 and carried over into the first quarter of 2009,” says Phil Romello, senior vice president and multiemployer retirement practice leader.
A report of the results of latest zone-status survey of multiemployer pension plans is available through The Segal Company’s Web site.
