Specifically, CSPF's annual returns were above the median nine times and below it six times-and CSPF's overall (dollar-weighted) average annual return from 2000 through 2014 was close to that of the peer median average return of 4.8 percent. Similarly, comparing CSPF's returns to a peer group of similar multiemployer defined benefit plans using federally required annual reports found that CSPF's annual investment returns were in line with those of its peers. For example, GAO's analysis of returns using the peer group measure used by CSPF known as the Wilshire Associates' Trust Universe Comparison Service (TUCS), showed that CSPF's annual investment returns since 1995 were above the median about as many times as they were below. GAO found that CSPF's investment returns and expenses were generally in line with similarly sized institutional investors and with demographically similar multiemployer pension plans. CSPF officials and named fiduciary representatives said these changes are intended to reduce the plan's exposure to market risk and volatility, and provide participants greater certainty prior to projected insolvency. The plan is projected to become insolvent on January 1, 2025. Treasury securities with intermediate and short-term maturities. As a result, assets will be gradually transitioned from “return-seeking assets”-such as equities and emerging markets debt-to high-quality investment grade debt and U.S. In 1993, the named fiduciaries started to increase investment in equities, and their policies continued to direct that asset allocations be weighted toward equities until early 2017.īetween 20, the court approved three plan decisions to move a total of 50 percent of CSPF's assets into passively-managed accounts (passive management typically seeks to match the performance of a specific market index and reduce investment fees).Īn early-2017 investment policy change precipitated by CSPF's deteriorating financial condition will continue to move plan assets into fixed income investments ahead of projected insolvency, or the date when CSPF is expected to have insufficient assets to pay promised benefits when due. Subsequent changes include the following: Initially, the named fiduciaries sold the troubled real estate assets acquired during the pre-consent decree era. The original consent decree gave an independent asset manager-called a named fiduciary-exclusive authority to set and change the plan's investment policies and manage plan assets, and prohibited CSPF trustees from managing assets or making investment decisions. Stakeholders noted that while each individual factor contributed to CSPF's critical financial condition, the interrelated nature of the factors also had a cumulative effect on the plan's financial condition.īoth CSPF's investment policy and the process for setting and executing it have changed several times since the consent decree was established in 1982. In addition, the market declines of 2001 to 20 had a significant negative impact on the plan's long-term investment performance.
At that time, UPS accounted for about 30 percent of the plan's active participants (i.e.
The most dramatic change in active participants occurred in 2007 when the United Parcel Service, Inc. CSPF's active participants made up about 69 percent of all participants in 1982, but accounted for only 16 percent in 2016. For example, stakeholders stated that changes within the trucking industry as well as a decline in union membership contributed to CSPF's inability to maintain a healthy contribution base. Stakeholders GAO interviewed identified numerous factors that contributed to CSPF's financial condition. End-of-year participant data and beginning-of-year funding data are presented at the closest year end. Note: The most recent, publicly available data were from 2016. Since then, CSPF has made some progress toward achieving its targeted level of funding however, CSPF has never been more than 75 percent funded and its funding level has weakened since 2002, as shown in the figure below.ĬSPF Funding Levels and Active and Nonworking Participant Totals, 1982–2016 According to its regulatory filings, CSPF had less than half the estimated funds needed to cover plan liabilities in 1982 at the time it entered into a court-enforceable consent decree that provides for oversight of certain plan activities. The Central States, Southeast and Southwest Areas Pension Fund (CSPF) was established in 1955 to provide pension benefits to trucking industry workers, and is one of the largest multiemployer plans.
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