This represents a slight decline from the 60% in 2012 (see “Multiemployer Plan Health Declined in 2012”), according to Segal Consulting’s Survey of Plans’ 2013 Zone Status. The percentage of plans in the yellow zone (endangered status) was the same for 2013 as for 2012, at 14%.
Between 2012 and 2013, the percentage of plans in the red zone (critical status) increased from 26% to 27%.
Despite the slight change, the average PPA’06 funded percentage for all surveyed plans was 84% in 2013, the same percentage as in 2012. Although the percentage of plans in the green zone has declined since 2011 (from 63%), by 2013 it was higher than in 2010 (53%) and dramatically higher than in 2009 (38%). According to the survey findings, one reason for the improvement since 2010 is the ongoing strengthening of the investment markets. For the nearly five years from April 1, 2009 (the bottom of the market) to December 31, 2013, the median return for Taft-Hartley pension funds with a 40% to 70% allocation to equities was 13.8%, according to Segal Rogerscasey (the SEC-registered investment solutions member of The Segal Group).
The zone-certification rules of PPA’06 will expire (sunset) for plan years beginning after December 31, 2014, unless Congress acts to extend or eliminate the deadline (see “Sunset of PPA Rule for Pensions Requires Clarification”).
The Segal Winter 2014 Report of Results from the Survey of Calendar-Year Plans’ 2013 Zone Status is available here.