Multiemployer Pension Plans: Moody's Analytical Approach

Abstract

In this Rating Methodology, originally issued as a Request for Comment in January 2006, we discuss Moody's analytic approach to evaluate the impact of under-funding in multiemployer defined benefit pension plans on issuers of debt that participate in multiemployer plans. This Methodology discusses:

• The nature and operation of multiemployer plans and how do they differ from single-employer plans

• Major companies that are the largest participants in multiemployer plans

• Trends in company plan contributions and factors driving those trends

• The identity and funded status of major multiemployer plans

• Moody's methodology for considering multiemployer plans, including our analytical adjustments to a company's financial statements.

Based on comments received from interested parties, including companies that sponsor multiemployer plans, actuaries, investors, and unions and trade organizations representing employees that participate in multiemployer plans, we have made two notable changes to the proposed methodology described in our Request for Comment. Those changes and Moody's next steps are discussed below.

Keywords: Multiemployer Pension Plans, Moody's, Ratings, Pension Plans, Rating Methodology, Funded Status