Slightly fewer plans in “green zone” in 2012, Segal finds

A recent Segal Company survey shows a slight decrease in the number of multiemployer pension plans that fell into the “green zone” in 2012 and a slight decrease in plans’ funded percentage. The results are reported the Survey of Plans’ 2012 Zone Status, which reports the percentage of multiemployer pension plans that fell into each of the three “zones” under the Pension Protection Act of 2006 (PPA; P.L. 109-280) – green, yellow and red – in 2012.

The survey is based on actual certifications for more than 360 plans representing a wide range of industries that have plan years beginning January 1 to September 1. The certifications took into account any changes in plan design, employment, negotiated contribution rates and investment performance, through the end of each 2011 plan year. The “green zone” means that the plan is not in an endangered or critical status. The “yellow zone” signifies that a plan is in endangered status. The “red zone” means that a plan is in critical status.

According to Segal, between 2011 and 2012, the percentage of plans in the green zone decreased slightly to 60% (from 63% in 2011). In contrast, the percentages of yellow-zone and red-zone plans increased slightly over that period, from 13% to 14% and 24% to 26%, respectively. Segal found that the average PPA funded percentage for the surveyed plans was 84% in 2012, a slight decrease from 87% in 2011.

The Segal survey also includes data on industry differences in the calendar-year plans’ zone status between 2012 and 2011. It also provides background information about the zones and information about practical steps trustees are already taking, or may wish to consider taking, to improve their plans’ future zone and overall funding status.

Source: Segal Company, Survey of Plans’ 2012 Zone Status, Winter 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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