According to The Multiemployer Retirement Plan Landscape: A 15-Year Look (2006-2020), the average defined contribution (DC) plan account balance increased from $23,400 at the end of 2006 to $54,100 at the end of 2020, while aggregate disbursements also grew. The increase in disbursements—coupled with a lack of growth in the number of active participants having contributions made on their behalf—was likely driven by maturing plan populations as an increasing number of participants cashed in their accounts upon retirement or termination. In addition, investment returns over this period were volatile and included the biggest collapse in the financial markets since the Great Depression.

This report is based on the Form 5500 annual reports filed by 1,036 DC multiemployer plans with the U.S. Department of Labor. The report tracks DC plan trends over a 15-year time horizon. Here are 10 key takeaways from the extensive report on multiemployer defined contribution plans.

Plans in the Study

• The total number of multiemployer DC plans decreased from 1,150 for the 2006 plan year to 1,045 for the 2020 plan year, with some fluctuations year by year. 1,036 of these plans have assets greater than zero. Factors such as the establishment of new plans, mergers and plan terminations contributed to changes in the overall counts over the 15-year period.
• Examined DC plans are divided into three broad types. More than one in three (34%) indicated they are money purchase plans, which typically have fixed rather than variable contributions. Three in ten (30%) indicated they are profit-sharing plans, followed by 401(k) plans (28%). The remaining 7% included plans that did not specify a plan type or indicated they are target benefit plans, offset plans or 403(b) plans.
• An analysis determined that a significant majority of multiemployer DC plans—at least 75%—are associated with a multiemployer defined benefit (DB) plan. In other words, most DC plans provide retirement income that supplements retirement income provided by a DB plan.
• The combined market value of assets of the plans in the study is more than $219 billion, while the median asset value of these plans is $59 million.
• The median number of plan participants is 1,364, and the average number of plan participants is 4,332. The median number of participating employers is 44.

Plan Cash Flows

• Form 5500 figures captured contributions made by employers and participants as well as disbursements. Aggregate contributions have increased over the 15-year period, increasing from $6.1 billion in 2006 to $12.3 billion in 2020, with fluctuations throughout. A number of factors may have driven the fluctuations, including changes to wage packages stemming from the economic turmoil at the time.
• Aggregate disbursements, have also increased over the 15-year period, from $4.2 billion in 2006 to $15.1 billion in 2020. This trend is likely driven by maturing plan populations, with increasing numbers of participants taking their account balances upon retirement or termination of covered employment.
• Total net cash flow changed from a positive net cash flow of $1.8 billion in 2006 to a negative net cash flow of $2.8 billion in 2020. As noted, this trend is driven by a sharp increase in aggregate disbursements caused by maturing plan populations and the impact of the COVID-19 pandemic and the CARES Act in 2020.

Plan Investments

• The study also compiled year-by-year returns of the identified calendar year plans. Investment returns were consistently positive over the 15-year period, with the exception of 2008 (-20.2%), 2015 (-0.1%), and 2018 (-4.2%). The median annualized return for this subset of 480 calendar year plans for the examined 15-year period is 6.12%.
• The average account balance for a participant in the median multiemployer DC plan was about $54,100 at the end of 2020, up from about $47,100 at the end of 2019.

More About Multiemployer Retirement Plans

Horizon Actuarial Services, LLC and the International Foundation of Employee Benefit Plans have partnered on The Multiemployer Retirement Plan Landscape: A Fifteen-Year Look, an annual benchmarking report on multiemployer pension and retirement plans. Trustees can use the report to benchmark their own plans and understand how the overall multiemployer system is doing. Access the full report to see the complete findings.