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About PBGC

Multiemployer Insurance Program Facts

We are updating our multiemployer pension content to reflect changes made by the Multiemployer Pension Reform Act of 2014. Sign up to be notified when this content is updated.

What Is a Multiemployer Plan?

A multiemployer plan is a pension plan created through an agreement between employers and a union. The employers are usually in the same or related industries. For example, multiemployer plans provide benefits for people in industries, such as transportation, construction, and hospitality.

For additional information about multiemployer plans, see: Introduction to Multiemployer Plans; Multiemployer Pension Reform Act of 2014 FAQs, and Multiemployer Benefit Guarantees.

How Is PBGC's Multiemployer Program Funded?

  • The program is funded and maintained separately from PBGC's other insurance program, which covers only single-employer plans. PBGC receives no federal tax dollars.
  • Each multiemployer plan pays an annual insurance premium to PBGC based on the number of participants covered by the plan. Information about the current and historical rates is available on the Premium Rates webpage.
    • Participants include (i) active employees, (ii) former employees who worked long enough to earn vested benefits, but who left the plan without receiving a retirement benefit immediately, and (iii) retirees.
  • PBGC provides financial assistance to plans that are unable to pay basic PBGC-guaranteed benefits when due.
  • Before a plan receives financial assistance from PBGC, the plan must suspend payment of all benefits in excess of the guarantee level.
  • PBGC receives no assets from failed multiemployer plans.

What Are the Guarantee Limits?

  • PBGC's maximum benefit guarantee is set by law. We guarantee only vested benefits, which are benefits that a person has earned a right to receive and that cannot be forfeited.
  • PBGC's multiemployer guarantee program is complicated and difficult to summarize quickly. The guarantee sometimes is summarized as a maximum guarantee amount of $12,870 per year (payments are made monthly). 
    • But that is only a special case of the guarantee; it applies to people who worked exactly 30 years in jobs covered by the plan and have a moderately high promised benefit.
  • Generally, PBGC's guarantee is based on a pension for each year of service a person earns under his or her pension plan. As a monthly benefit amount, we guarantee a payment equal to:
    • 100% of the first $11 of the plan's monthly benefit rate, plus 75% of the next $33 of the monthly benefit rate,
    • times the participant's years of credited service.
    If the plan provides a benefit of more than $44 per month per year of service, the guarantee disregards that higher level.
  • PBGC's maximum monthly guarantee, therefore, is $35.75 per month (($11 x 100%) + ($33 x 75%) = $35.75) times a participant's years of credited service.
    • The guaranteed benefit is not adjusted for inflation or cost-of-living increases.

How Does PBGC's Guarantee Work in Terms of Annual Pension Amounts for Participants With Different Amounts of Service?

If a person has:

10 years of service — PBGC's maximum guarantee cannot exceed $4,290 per year and may be less.

  • PBGC fully guarantees the pension up to a yearly amount of $1,320. This assumes a person earned a benefit of $11 per month, and is calculated as follows:
    • ($11 per month x 100%) x 12 months x 10 years = $1,320 per year.
  • If the pension exceeds $1,320 per year, PBGC guarantees 75% of the rest of the pension, but not to exceed a total benefit of $4,290 per year.
    • The maximum guarantee is: ($11 per month x 100%) + ($33 per month x 75%) = $35.75 per month.  $35.75 x 12 months x 10 years = $4,290 per year.

20 years of service — PBGC's maximum guarantee cannot exceed $8,580 per year and may be less.

  • PBGC fully guarantees the pension up to a yearly amount of $2,640. This assumes a person earned a benefit of $11 per month.
  • If the pension exceeds $2,640 per year, PBGC guarantees 75% of the rest of the pension, but not to exceed a total benefit of $8,580 per year.

30 years of service — PBGC's maximum guarantee cannot exceed $12,870 per year and may be less.

  • PBGC fully guarantees the pension up to a yearly amount of $3,960. This assumes a person earned a benefit of $11 per month, and is calculated as follows:
    • ($11 per month x 100%) x 12 months x 30 years = $3,960 per year.
  • If the pension exceeds $3,960 per year, PBGC guarantees 75% of the rest of the pension, but not to exceed a total benefit of $12,870 per year.
    • The maximum guarantee is: ($11 per month x 100%) + ($33 per month x 75%) = $35.75 per month.  $35.75 x 12 months x 30 years = $12,870 per year.

For more information about PBGC benefit guarantees, see the Multiemployer Benefit Guarantees page.