Administrators of many multiemployer defined benefit pension plans are thinking about using a new, 1-year funding status freeze option.
Researchers at the International Foundation of Employee Benefit Plans, Brookfield, Wis., have published that finding in a summary of results from a recent survey of 237 foundation members who help run multiemployer plans in the United States.
In 2008, 80% of multiemployer DB plans were classified as “safe” by government standards, with enough assets to support at least 80% of pension benefits obligations.
Now, because of investment market turmoil, only 20% are classified as safe, and 38% are classified as “critical,” meaning that they have just 65% of the required funding, IFEBP researchers report.
A provision in the Worker, Retiree, and Employer Recovery Act of 2008 will let multiemployer plans that were classified as safe in 2008 cope with the recent turmoil by taking a 1-year funding status freeze.
About 60% of eligible DB plans that have decided what to do have chosen to take a freeze, the IFEBP researchers report.
About 63% of the survey participants said their pension plans are implementing a freeze in the hope that the investment markets will rebound.
Another 35% said they are waiting to see if the federal government will provide additional funding and relief.