There’s bad news concerning the funded status of U.S. multiemployer pension plans, Moody’s Investors Service says. According to Pensions & Investments, Moody’s reports that underfunding was worse by year’s end in 2013 than it had been one year before.
Moody’s says that the plans were underfunded by almost $318 billion, $32 billion more than in 2012. It attributed the results at least in part to asset growth lagging behind growth in pension obligations. Moody’s also cited the continuing after-effects of the Great Recession, saying that it erased one-quarter of multiemployer plan assets, which, in turn, resulted in funding slightly exceeding 50% as well as heightened the difficulty in assets meeting obligations.
Moody’s Senior Vice President and Senior Accounting Analyst Wesley Smyth outlined some of the bitter wages of the underfunding, including:
Moody’s says that the plans were underfunded by almost $318 billion, $32 billion more than in 2012. It attributed the results at least in part to asset growth lagging behind growth in pension obligations. Moody’s also cited the continuing after-effects of the Great Recession, saying that it erased one-quarter of multiemployer plan assets, which, in turn, resulted in funding slightly exceeding 50% as well as heightened the difficulty in assets meeting obligations.
Moody’s Senior Vice President and Senior Accounting Analyst Wesley Smyth outlined some of the bitter wages of the underfunding, including:
- increasing debt at some companies;
- the prospect of future ratings downgrades;
- small companies and those that are in weak positions leaving the multiemployer plans in which they participated, increasing the stress on companies that remain in the plans; and
- plan sponsors restructuring liabilities or leaving the plans.
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