Segal Group’s Model Multi-Employer Pension Plan Returns to Fully Funded Status in Third Quarter of 2017

Improved Status is Attributed to a Decrease in Liabilities

While equities had minimal returns in Q3, the drop in liabilities pushed the model MEPP plan from The Segal Group back into fully-funded status. (Graphic: Business Wire)

NEW YORK & TORONTO--()--The funded status of the Segal Group’s model multi-employer pension plan (MEPP) increased by 4 percentage points last quarter to 101 percent. The increase was primarily due to a 4 percent drop in liabilities, as the overall investment return of the model plan’s portfolio was almost zero.

“The third quarter was marked by the Bank of Canada’s two consecutive rate hikes, which resulted in a negative quarter for fixed income,” said Ruo Tan, President of Segal Rogerscasey Canada. “The Canadian equity market rose as the Mining sector picked up, and stabilization of oil prices helped the Energy sector. The positive return and low market volatility for U.S. equities demonstrates that investors remained optimistic on strong U.S. corporate earnings, low inflation and a tight job market.”

Declining discount rates in the first two quarters were reversed in Q3, bringing the benchmark rate back up to the level last seen at the end of 2016. This led to the decrease in the model plan’s liabilities, which raised the funding level back up above 100 percent.

Segal notes there was an increase in actual hours worked for all industries combined and each industry listed:

Percentage Change in Hours Worked, by Industry, Q3 2016-Q3 2017
Construction       2.1%
Manufacturing 1.6%
Transportation & Warehousing 5.9%
Utilities 0.3%
Wholesale & Retail Trade 2.5%
All Industries Combined 2.4%
Source: Statistics Canada, CANSIM table 282-0092

“This is good news for the ongoing viability of plans in these industries,” noted Cameron McNeill, Segal Group Canadian Business Leader. “Reduced hours would negatively impact the ability to cover fixed costs.”

To speak with one of our experts on how trustees can best examine their multi-employer plans, please contact Todd Kohlhepp.


The Segal Group
Todd Kohlhepp, 212-251-5087


The Segal Group
Todd Kohlhepp, 212-251-5087