Segal Consulting recently released the results of its latest Survey of Plans’ Zones Status, which shows that zoning of multiemployer plans has remained stable, with 64 percent of plans in the green zone and 25 percent in the red zone.
“The median investment return for clients who filed certifications in the 12 months ending on Sept. 30 was just 0.01 percent, but despite the low returns the number of plans in the green zone remained stable,” Segal Senior Vice President Diane Gleave said. “The gradual increase in the percentage over recent years is in part a result of the actions taken by trustees in their Rehabilitation and Funding Improvement Plans.”
These figures, while not improving drastically, show a marked improvement when compared to the zoning rates of 2009, when the global financial crisis led to just 38 percent of plans being certified in the green zone. This edition of the survey also found that nearly half of the 25 percent of plans in the red zone were in that zone before the financial crisis.
“Going forward, trustees should monitor other measures beyond zone status,” Gleave said. “This includes cash flow, contribution margins or deficits, and the impact of potential employer withdrawals, so that they can take appropriate measures to manage risks.”