Inside Pension ResearchQ&A with Lisa Schilling June/July 2018
The Society of Actuaries (SOA) continues to develop and update a variety of research on pension plans. These studies and reports cover private and public plans, including single employer and multiemployer plans. Lisa Schilling, FSA, EA, FCA, MAAA, retirement research actuary at the SOA, provides insights on the latest pension research.
What types of multiemployer research findings have the SOA released?
Schilling: The SOA has released several studies on U.S. multiemployer pension plans, including on contribution indices, stress metrics and employer withdrawals among pension plans. For example, the contribution indices are metrics for measuring whether pension plan contributions paid down unfunded liabilities or met other benchmarks, such as regulatory requirements. The employer withdrawals research is a longitudinal study on the prevalence and impact of employer withdrawals. On average during 2009–2015, 1.2 percent of all participating employers withdrew annually, affecting 18 percent of plans and 63 percent of participants. The SOA also annually released stress metrics on previous benefit cost (PBC) and previous benefit cost ratio (PBCR) of multiemployer pension plans.
The SOA also provides summaries of key financial statistics from publicly available information for several multiemployer pension plans. The source of these statistics is the Form 5500 that plans file with the U.S. Department of Labor each year. These multiemployer pension plans include:
- Major League Baseball (MLB) Players Pension Plan stats
- National Football League (NFL) Players’ Pension Plan stats
- National Basketball Association (NBA) Players’ Pension Plan stats
- National Hockey League (NHL) Players’ Retirement Benefit Plan stats
- Entertainment Industry Pension Plan Funded Status Comparison
- American Federation of Musicians and Employers’ Pension Fund stats
- American Federation of Television and Radio Artists (AFTRA) Retirement Plan stats
- Screen Actors Guild – Producers Pension Plan stats
- Directors Guild of America – Producer Pension Plan stats
- Producers – Writers Guild of America Pension Plan stats
- Motion Picture Industry Pension Plan stats
What were the findings from the latest report on insolvencies with pension plans?
Schilling: The May 2018 study “U.S. Multiemployer Pension Plan Pending Insolvencies” explores the impact of insolvency on these 115 “Critical and Declining” plans, their participants and contributing employers. The study examines projected insolvencies and their impact on retirees and related subject matter, as well as sensitivity to investment returns. The study found that optimistic investment returns have limited impact on insolvency among the plans primarily because their net cash flow positions tend to be severely negative. The projections show a steady increase in the number of insolvent plans. By 2028, 50 plans are projected to become insolvent, increasing to 91 by 2033 and 107 by 2038. The 50 plans projected to become insolvent by 2028 are projected to cover roughly 545,000 participants with about 2,700 contributing employers. The 107 plans projected to exhaust assets by 2038 are projected to cover about 875,000 participants with more than 11,000 contributing employers.
What studies are there on single employer pension plans?
Schilling: Earlier this year, the SOA developed a longitudinal study of single employer plan contribution indices in the United States. Contribution indices are metrics for measuring whether pension plan contributions paid down unfunded liabilities or met other benchmarks, such as regulatory requirements. About 11 percent of plans had an unfunded liability for 2015. Preliminary results for 2016 show an increase in unfunded liabilities—roughly 27 percent of plans had unfunded liabilities.
What other tools or resources are available?
Schilling: The SOA developed the Annuity Factor Calculator to calculate an annuity factor utilizing user-selected annuity forms, interest rates, mortality tables and projection scales commonly used for defined benefit pension plans in the United States and Canada.