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About PBGC

Multiemployer Insurance Program Fact Sheet

What Is a Multiemployer Plan?

  • A collectively bargained pension arrangement involving unrelated employers, usually in a common industry, such as construction, services, trucking, retail, textiles, or coal mining.
  • Different from single-employer plans. Single-employer plans may be sponsored by either:
    • one employer, under or not under a collective bargaining agreement, or
    • several unrelated employers, but not under a collective bargaining agreement.
  • Many multiemployer plans determine the participant's monthly benefit as a flat dollar amount for each year of service.

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.
  • For 2014, each multiemployer plan pays an annual insurance premium of $12 per participant to PBGC.
    • 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.