U.S. defined benefit multiemployer pensions have been fully funded for the first time in the history of Millman’s Multiemployer Pension Funding Study, the firm reported today.
The funding level improved by three percentage points, up from 97% as of December 31, 2024, to 100% as of June 30, an all-time high since the inception of the study in 2007.
Milliman’s data are based on standard actuarial assumptions and data in the latest Form 5500 filings from all U.S. multiemployer plans. The funding shortfall for all plans filed as of June 30 improved by about $26 billion in the first half of 2025 to a funding surplus of about $3 billion in the six-month period ending June 30, overcoming a $23 billion shortfall at year-end 2024.
Robust investment returns and continued payments under the federal Special Financial Assistance Program, created under a provision of the American Rescue Plan Act of 2021, contributed to the increase. The SFA Program allows multiemployer plans in critical and declining status to apply for and receive a lump sum of money, administered by the Pension Benefit Guaranty Corporation, to make benefits payments through 2051.
As of June 30, 122 plans have received nearly $73 billion in special financial assistance grants, adding 9% to the aggregate funding percentage since the program’s inception. At the time the program was enacted, it was estimated that about 1.3 million participants of the 10 million in multiemployer plans were in plans that were expected to soon run out of money.
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Without the SFA Program in place, the aggregate funding percentage would be approximately 91%, Milliman’s report indicated.
Multiemployer plan assets grew to $830 billion in the first half of the year, compared with $827 billion in liabilities, supported by an estimated 6.1% investment return for the period, Milliman’s report showed. The liabilities are projected using discount rates equal to each plan’s actuarial assumed rate of return on assets, which has stayed at 6.8% since year-end 2024.
Pension funds that receive special financial assistance must monitor the interest resulting from the grant money separately from other sources of funding. The PBGC requires that at least two-thirds of the grant money it provides be invested in “high-quality fixed income investments.” The Final Rule on Special Financial Assistance, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds.
According to Milliman’s study, investment performance will remain the chief driver of most plans’ funded status, particularly since the majority of expected special financial assistance grants have been paid. The $73 billion that plans have received to date comes out of $80 billion that program initially was projected to cost.
However, a recent ruling in the U.S. 2nd Circuit Court of Appeals could significantly broaden special financial assistance eligibility to more than 100 multiemployer plans that were terminated by mass withdrawal. In Board of Trustees of the Bakery Drivers Local 550 and Industry Pension Fund v. PBGC, the 2nd Circuit found that the special financial assistance statute does not exclude plans solely based on a prior termination.
Milliman’s report stated that this ruling could increase total program outlays by an additional $6 billion beyond the PBGC’s original estimate.
“The impact of SFA will emerge over time and will be reflected in future studies as those funds are received,” Milliman stated. “Eligible plans have until December 31, 2025, to submit an initial SFA application, and any revised application must be submitted by December 31, 2026. Many of these plans have already placed themselves on the waiting list.”
Additionally, on August 18, the U.S. Federal Circuit Court of Appeals ruled in King v. United States that the Multiemployer Pension Reform Act of 2014, which had enabled underfunded multiemployer plans to reduce pension benefits to prevent a fund’s collapse, does not constitute an uncompensated “taking” of private property under the Fifth Amendment. Writing for the court, U.S. Circuit Judge Timothy Dyk explained that pension benefits are a contractual right to receive payments from a pension plan, not an ownership interest in the plan’s underlying assets, affirming a lower court’s decision in favor of the government.
“The legislative enactment effectively conforms [the Employee Retirement Income Security Act of 1974’s] definition of insolvency more nearly to how the term is used in the Bankruptcy Code,” the court’s opinion stated. “The reallocation of claims to a limited pool of funds was well ‘within the power of Congress to impose’ under a longstanding regulatory scheme.”
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PBGC’s SFA Program Boosts Multiemployer Funded Level to 97%
PBGC Approves SFA Funds for 3 Multiemployer Pension Funds
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