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Multiemployer Plan News and Info

On January 29, 2013, the federal ERISA agencies sent to Congress several reports on multiemployer pension plans insured by PBGC. They provide information on the financial health of multiemployer plans and the PBGC's multiemployer insurance program, but make no recommendations. They should be helpful as Congress considers potential changes to multiemployer pension laws and to PBGC's multiemployer insurance program.

Multiemployer Plan Report
Reports on multiemployer plans and the effects of the PPA

PBGC's Multiemployer Program
Reports that current premiums will be inadequate to maintain current guarantee levels

Click for each report. Other sources of information on multiemployer plans are listed below.

Multiemployer Plans Matter

Multiemployer plans provide retirement security to more than 10 million people and their families. Multiemployer plans provide the protection of lifetime income. They are also portable: workers won't lose their benefits if they change jobs within the same industry. The pension stays with them throughout their careers.

The plans offer employers, especially small employers, a way to provide pensions to their employees without the administrative costs and burdens of sponsoring a separate retirement plan.

Multiemployer plans cover a variety of industries, including construction, supermarket chains, transportation, manufacturing, and service employees working in places like hotels and restaurants. They vary in size from small local plans covering a few hundred participants to large regional or national plans covering hundreds of thousands. There are participants in every state.

Multiemployer plans cover participants in businesses throughout America.  Number of participants covered by the 170 largest multiemployer plans, by state.  Washington, Oregon, California, Illinois, Indiana, Minnesota, Ohio, Pennsylvania, New Jersey, and New York have 250,000 to 1.2 million.  Nevada, Colorado, Texas, Kansas, Tennessee, Georgia, Florida, Kentucky,  Georgia, Massachusetts, Connecticut, Virginia have 100,000 to 249,999.  Idaho, Utah, Arizona, Nebraska, Missouri, Oklahoma, Alabama, North Carolina, Maryland, DC have 25,000 - 99,999.  Nebraska, Iowa, Arkansas, Louisiana, Mississippi, South Carolina, West Virginia, Hawaii have 10,000 to 24,999.  Alaska, New Mexico, Wyoming, Montana, South Dakota, North Dakota, Vermont, New Hampshire, Maine, Road Island, Delaware have 1,000 - 9,999.

Multiemployer Plans have been Affected by Economic & Market Declines, but Most are Recovering

Like single-employer plans, multiemployer plans have been strongly affected by recent declines in the economy and financial markets. While most plans currently are underfunded, our research suggests the majority will gradually recover as the economy improves. Generally, plans are using the resources provided by the Pension Protection Act of 2006 (PPA) to reduce costs, limit liabilities, and steadily increase funding contributions. The law also gave plans flexibility to reduce excessive stress on employers and participants.

Mutiemployer PPA Funded Status has Improved Since 2009. in 2009 34% were Critical. 9% were Seriously Endangered. 25% were Other Endangered. 32% were Neither Critical nor Endangered. In 2011 24% were critcal. 1% were seriously endangered. 15% were other Endangered. 60% were Neither Critical nor endangerment.

Severely Distressed Plans Will Need More Help

Most multiemployer plans appear primed for gradual recovery, but a minority of them remain depressed. Barring future changes to the multiemployer plan system, they won't be able to recover even using the tools available under the Pension Protection Act. These plans often operate in declining industries or highly competitive ones, and have a large numbers of retirees. The plans also lack sufficient funds to pay retiree benefits. Additionally, many of these plans face sharp requirements under PPA funding improvement or rehabilitation plans. Achieving long-term sustainability for these plans is of vital importance to participants and employers.

PBGC's Multiemployer Insurance Program

If a multiemployer plan runs out of money, PBGC steps in to pay benefits up to about $13,000 per year (for retirees with 30 years of service). Unlike its insurance of single-employer plans, PBGC does not take over the plan and become responsible for benefits; instead the agency funds the plan's ongoing costs and audits to ensure they are reasonable.

In addition to providing financial assistance to insolvent plans, PBGC runs a specialized multiemployer unit staffed with experts that can help preserve plans and protect pensioners. The multiemployer program offers technical assistance on issues such as potential mergers and alternative withdrawal liability methods proposed by plans to help attract new employers and retain existing employers. Although PBGC has limited authority to intervene with troubled plans before insolvency, PBGC seeks to provide flexibility to enable plans to deal with the challenges they face, restoring fiscal balance and long-term stability. We encourage multiemployer plans to visit our Multiemployer plans page, and contact us with questions.

PBGC's Program is Financially Strained

At the end of FY 2013, the multiemployer insurance program had a $8.3 billion deficit, with assets of $1.7 billion and booked liabilities of $10.0 billion; the deficit at the end of FY 2012 was $5.2 billion. PBGC paid $89 million in financial assistance for benefits and plan expenses to insolvent plans in FY 2013. This amount is projected to rise rapidly — with annual payments exceeding $1 billion in the next decade — as more plans become insolvent. These projected payments are related solely to plans with booked liabilities through FY 2013.

Over the next decade or so, even before any new obligations are added, there is a substantial risk that, without significant change to the multiemployer plan system and PBGC's program, the multiemployer insurance program will become insolvent and not be able to pay financial assistance. PBGC has begun discussions with the Congress about approaches to reduce this risk.

More information about the financial condition of PBGC's insurance programs can be found in our 2013 Annual Report.