Feb 5, 2018   SOURCE: BusinessWire

The Segal Group’s Model Multi-Employer Pension Fund Drops Below 100 Percent in Fourth Quarter of 2017

The funded status of The Segal Group’s model multi-employer pension plan (MEPP) decreased by 2 percentage points to 99 percent, due to a 6 percent increase in liabilities that offset a 4 percent gain in assets.

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(Graphic: Business Wire)

(Graphic: Business Wire)

“Both developed and developing countries continued to advance with strong investment returns in the last quarter of 2017,” said Ruo Tan, President of Segal Rogerscasey Canada. “The Canadian equity market was up with the biggest gains coming from the Healthcare sector, but geopolitical uncertainties pushed long bond yields down, resulting in a decrease in the benchmark discount rate and adversely impacting the model plan’s funded status.”

Segal also noted that there was an increase in actual hours worked year over year for all industries combined and each industry listed below except for Utilities.

   

Percentage Change in Hours Worked, by Industry, Q4 2016-Q4 2017

Construction

5.8%

Manufacturing

6.1%

Transportation & Warehousing

7.3%

Utilities

-10.3%

Wholesale & Retail Trade

2.6%

All Industries Combined

3.1%

 

Source: Statistics Canada, CANSIM table 282-0092

“The increase in hours bodes well for the health of a multi-employer pension plan, as it strengthens the ability to cover fixed-costs,” said Cameron McNeill, Sibson’s Canadian Business Leader. “The risk is magnified when a plan is dependent upon future contributions to pay down its unfunded benefit obligations.”

To speak with a Segal Group consultant about this issue of Direction and what our model MEPP’s funded status might suggest for other MEPPs, please contact Todd Kohlhepp.