Segal Consulting survey finds stability for multiemployer plans’ zone statuses

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.”