Retirement Blog

Finance Blogs » Retirement Blog » More bad news for pension plans

More bad news for pension plans

By Jennie L. Phipps ·
Monday, July 1, 2013
Posted: 4 pm ET

If you are a participant in a union multiemployer pension plan or a state or local government pension, the retirement planning news out Monday isn't great.

Some 37 percent of the officers of the country's largest multiemployer plans said in a survey released by Pyramis Global Advisors, which manages one-third of all assets in these plans, that they didn't believe the existing plans will survive. The main reasons they believe this are:

  • Company sponsors lack commitment: 36 percent.
  • Legislative requirements endanger the plans: 32 percent.

Other factors cited that put these large plans at risk include declining union membership, increasing benefit payments and the demise of some large-company sponsors.

Another study released Monday morning by the Center for Retirement Research at Boston College and the Center for State & Local Government Excellence determined that the funded status of state and local pensions declined in 2012 to 73 percent from 75 percent. At the same time, the annual required contributions that participating governments must make rose, but these entities made just 80 percent of these required payments.

Millions of workers and retirees are covered by these two kinds of retirement plans, and there is a strong and obvious need to put them on solid financial footing. Everybody is looking for a solution. The report on state and local pensions said the situation will likely improve if the stock market continues to be robust. The union pension managers told Pyramis they are willing to consider alternative investments including property, hedge funds and private equity to shore up shortfalls and manage volatility.

Neither of these ideas look like a slam-dunk.

If you depend on one of these pensions -- or hope you'll be able to do so one day -- how do you feel about these reports?

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
August 08, 2013 at 4:48 pm

The problem is not the economy or rate of return, the problem is excessive promised benefits in the first place. Leadership asleep at the wheel and excessive union demands caused this issue.

August 06, 2013 at 8:00 pm

Think things are bad now? Just keep voting Democrat and these will look like the "good ole days".

July 31, 2013 at 1:57 pm

Viola... This is not Bush's fault.. Stop being a follower and think for yourself.. This is obeyme's economy, no one else's .... And remember those trying to blame bush.. Democrats controlled house and senate under Bush... Republicans controlled both under Clinton ... Wow! There was a surplus under Clinton then!!! Go figure....

mark d
July 26, 2013 at 7:59 pm

riley I couldn't agree more. im part of a pension plan threw the teamsters and im sure I will be living as comfortable as I allow myself.people don't think about it when there young and will regret it later.

July 20, 2013 at 2:45 pm

bush fault, geez spare me...real old now...
obama can rein for twenty years and ould never take responsibilty for anything...bush printing all this money, bush proping market...
how bout this instead, blame zimmerman, makes as much sense.

July 08, 2013 at 7:42 pm

The Bush administration is the blame for this mess. Obama is just the scapegoat. That's why "they" let him win again.

July 06, 2013 at 10:49 pm

Viola - are you deaf, dum and blind? If you think this is bad news wait until after the 2014 election and the rest of Obama Care rolls out. We are done for thanks to those who put Obama in the White House.

July 06, 2013 at 2:10 pm

It's not the presidents fault. Go talk to Wall st and the banks and bush who took down this economy and none of them are in jail.

July 04, 2013 at 12:07 am

I retired with one of these plans. The money came out of my check before I got the check, therefore, I didn't have to worry about it, I didn't miss the money & I wasn't able to spend it. It is a modest pension, but it allows me to budget easily. I think they should return to these plans, as young people don't usually think about,or have the knowledge or willpower to save for retirement. It's done for you so you won't have to rely solely on social security, as so many nowadays do. One can have a reasonably comfortable retirement with a defined pension plan. Best idea for non-college educated workers. Less of a drain on tax-payer funded programs like welfare.

July 01, 2013 at 8:39 pm

It's not my fault.-Obama (2009, 2010, 2011, 2012, 2013...)