According to the executive director of the National Coordinating Committee for Multiplayer Plans, Randy DeFrehn, the answer is ‘yes.’ Of course, there are 148 plans, representing 1.5 million members, in the at-risk group; however, such plans account for only a fraction of 1450+ multi-employer plans across the country. Since there are only few plans that represent a huge number of members, such plan holders are at a risk of more than 10% than all participants.
Alike several other investments, some multi-employer plans have also undergone a difficult time during the recession; however, there are many more single employer retirement pension plans in comparison to multi-employer pension plans that had been facing financial crisis during recession, alleged DeFrehn. Multi-employer pension plans came into prominence only during 1950s and 1960s, which further leveled off during 1990s. Such plans consist of certain characteristics of defined benefit plans, but have more lenient eligibility requirements as compared to the latter.
The plans are governed by a board of trustees and are focused towards employees in a scenario where the relationship between employer and employees is more transitory and fluid. Such industries include lumber, construction, trucking, steel, and media, However, whether such plans are viable for investment or has come under the under strict scrutiny during the last 6 months after certain government reports outlining the disadvantages of such plans. For instance, a report predicted that insolvencies in such would almost double by 2017.
On the other hand, cash flows for PBGC are positive because investment returns and premiums on multi-employer insurance fun asset have exceeded the benefit payments. This balance is more likely to change by 2017 when the number of insolvent plans is expected to double. Of course, there are some concerns with multi-employer retirement pension plans; however, Government Accountability Office is trying to cope with the same and provide the best solution to people who have worked for the complete duration. With this, it is expected that multi-employer plans will reach for the growing demands in the years to follow.
