Fewer Multiemployer Plans in Dire Straits, IRS EPCU Project Shows

Fewer multiemployer pension plans are in bad shape, according to figures just released by the IRS Employee Plans Compliance Unit (EPCU). The EPCU updated the data concerning its Multiemployer Actuarial Certification Project, which shows a slow but steady improvement in the status of multiemployer plans since the depths of the Great Recession.

The EPCU Multiemployer Actuarial Certification Project is intended to collect and document actuarial certifications for multiemployer defined benefit plans that must be filed under the Pension Protection Act of 2006 and Internal Revenue Code Section 432. Certifications must be submitted to the Secretary of Treasury by the 90th day of each plan year and must indicate the funded status of the plan. Treas. Reg. §1.432(b)-1 indicates these certifications should be sent to the EPCU.

The first and second charts in the update show a sharp increase in plans in critical and seriously endangered status, respectively, occurring in 2009 and probably reflecting economic issues. The update shows that there was some — but not full — recovery in the number of plans in critical condition; in addition, there was a steadily decreasing percentage of plans that were seriously endangered.

The updated data, which adds figures from 2013, shows that:

• 25% of multiemployer plans were in critical status, 1.47 percentage points lower than in 2012 and almost 10 percentage point drop since 2009;

• less than 1% of plans were in seriously endangered status, down almost 9 percentage points from 2009;

• slightly more than 14% were in endangered status, just over 10 percentage points lower than 2009; and

• • 59% were in neither endangered nor critical status, the highest level for that category since 2008.

The updated information comes just days after the IRS issued temporary regulations providing guidance on administering a vote by multiemployer plan participants regarding suspension of benefits when such a plan is determined to be in critical and declining status.