Many Multiemployer Pension Plans Expected to Fail Within 20 Years

Cheiron Inc. says 114 plans covering 1.3 million workers are underfunded by $36.4 billion.

As many as 114 multiemployer pension plans, covering 1.3 million workers, could fail within 20 years, according to Cheiron Inc. The actuarial consulting firm says the plans are underfunded by $36.4 billion.

“Traditionally, participants in healthy multiemployer plans have been forced to pay for the guaranteed benefits of retirees and their families in failed plans,” says Joshua Davis, a consulting actuary with Cheiron. “If this happens again, it will push other plans into insolvency with terrible consequences for communities across the country. Action must be taken soon to prevent that from happening.”

The failing multiemployer plans informed regulators that they are in critical and declining status, as required by the Multiemployer Pension Reform Act of 2014. These plans have total assets of $43.5 billion and liabilities of $79.9 billion.

The Pension Benefit Guaranty Corporation recently announced it expects its insurance program for multiemployer pension plans will run out of money by the end of 2025.

Cheiron says that a combination of factors have led to worsening conditions for multiemployer pension plans, including the Great Recession of 2008, declining industries creating more retirees than workers, and employers exiting the plans either through bankruptcy or by withdrawing from the plans.