The Financial Status of Private Sector Multiemployer Pension Plans

IB#14-14

The brief’s key findings are:

  • While most multiemployer pension plans are finding their financial footing, a substantial minority face serious problems.
  • The key reason is a declining financial base, which results in negative cash flow.
  • Plans deemed in “critical” condition can raise contributions, cut future benefits, and/or cut “adjustable” benefits that apply to retirees as well as active workers.
  • To date, plans have focused on raising contributions and cutting adjustable benefits, with less emphasis on cutting benefit accruals for active workers.
  • Nevertheless, a simple model suggests that one third of “critical” plans could exhaust their assets within 30 years.