Financial Conditions of Multiemployer Pension Plans Generally Improved From 1978 to 1980

Pursuant to a congressional request, GAO studied the effects of the Multiemployer Pension Plan Amendments Act of 1980 and its provisions, including: (1) characteristics of the plan participants; (2) the plan's financial characteristics; and (3) indicators of the plan's financial condition.

GAO collected comparable multiyear data on a sample of multiemployer plans and issued a series of reports on the act's provisions using the data. GAO noted that: (1) considerable participant and financial data are generated to meet plan administrative needs and Employee Retirement Income Security Act requirements; and (2) these data can be used to develop indicators of the financial condition of the plans and the existence of potential risks. GAO found that: (1) the overall financial condition of the plans studied improved during the 1978 to 1980 period; (2) based on plan data, the plan's funded position and cash flow improved, but its contribution ratio declined; and (3) the vested benefits of the study area plans improved funding during the 1978 to 1980 period because the percentage increase in the value of assets was greater than the percentage increase in vested benefits. GAO also found that: (1) unfunded plan benefits continued to pose a substantial contingent liability against the insurance program; (2) the cash flow of the sample plans ranged from less than $1 to over $6 of income for every expense dollar; and (3) some of the sample plans had a low number of actives compared to other participants which indicated that the plans may not have the ability to generate enough contributions to pay for unfunded benefits.