The overall health of multiemployer defined contribution (DC) retirement plans improved from 2020 to 2021. The average account balance for a participant in a median multiemployer DC plan increased from $46,100 at the end of 2019 to $52,800 at the end of 2021, according to The Multiemployer Retirement Plan Landscape: A 15-Year Look (2007-2021) recently released by the International Foundation of Employee Benefit Plans.

Plans in the Study

The report examined Form 5500 data submitted by 1,049 multiemployer DC retirement plans with asset values greater than zero. These 1,049 multiemployer plans had total assets of approximately $227 billion and covered approximately 4.6 million participants and their beneficiaries. This compares to 2019 with 1,008 multiemployer plans covering about 4.5 million.

Plan Types

Total retirement income is often described as a three-legged stool consisting of a pension from a defined benefit (DB) plan, savings or a DC plan to supplement the DB plan, and benefits from Social Security. Of the 1,049 multiemployer DC plans in the study, it was determined that 817 (78%) were associated with an ongoing multiemployer DB plan and 17% were likely standalone DC plans. On an industry-by-industry basis, construction and transportation industries had a smaller percentage of standalone DC plans than other industries.

The most popular type of multiemployer DC plan in 2021 was money purchase plans (34%), followed by 401(k) plans (28%) and profit-sharing plans (32%). The remaining 64 plans (6%) did not specify a plan type or indicated they were target benefit plans, offset plans or 403(b) plans.

The Impact of the COVID-19 Pandemic and the CARES Act

To help the American people during the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. For multiemployer DC plans, the CARES Act included provisions that allowed plans to amend their rules with COVID-19–related early distributions free of tax penalty and/or loans. It is likely that many multiemployer plans amended their DC plan rules to take advantage of these provisions, as the data reflects this. There was a substantial (48%) increase in total distributions across all DC plans from 2019 to 2020 that was immediately followed the next year by a 16% decrease.

Plan Funding

Reflecting the economic slowdown due to the pandemic, plan funding was reduced with lower contributions across all plans. In 2019, aggregate contributions were $12.6 billion. Contributions decreased to $12.1 billion in 2020 and recovered to $13.4 billion in 2021. On an industry-by-industry basis, industries that were hit the hardest by the COVID-19 pandemic, such as the entertainment and service industries, had lower contributions. The entertainment industry was the worst hit, with contributions for each actively working participant decreasing by 45% from $3,300 in 2019 to $1,700 in 2020 and decreasing further to $1,600 in 2021.

Plan Investments

The median annualized return of multiemployer DC plans over the 15-year period from 2007 through 2021 was 6.3%. Investment returns were consistently positive over the 15 years, except in 2008 (-20.2%) and 2018 (-4.2%), as well as 2011 and 2015, which were close to zero. In the most recent years in the study, the median annualized return was 18.3% in 2019, 12.7% in 2020 and 12.4% in 2021. Note that for many DC plans, investment decisions are directed by participants and not investment policies established by plan trustees who work with professional advisors.

More About Multiemployer Retirement Plans

The Multiemployer Retirement Plan Landscape: A 15-Year Look (2007-2021) is the tenth multiemployer retirement plan benchmarking report produced in partnership with Horizon Actuarial Services, LLC, and the International Foundation of Employee Benefit Plans. The comprehensive report examines data from Form 5500 annual reports filed by multiemployer pension and retirement plans with the U.S. Department of Labor. As required by the Employee Retirement Income Security Act (ERISA) to satisfy annual reporting requirements, Form 5500 collects data on the benefits, funding, investments, and operations of employee benefit plans filed by private sector retirement plans.