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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, trucking, textiles, or coal mining
  • Different from single-employer plans. Single-employer plans may be sponsored by either:
    • one employer, pursuant or not pursuant to a collective bargaining agreement, or
    • several unrelated employers, but not pursuant to a collective bargaining agreement
  • Many multiemployer plans determine the participant's benefit on a flat dollar amount for each year of service

How is the Multiemployer Program Funded?

  • The program is funded and maintained separately from PBGC's other insurance program, which covers only single-employer plans
  • For 2014, each multiemployer plan pays an annual insurance premium of $12 per participant to PBGC
  • 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, it 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?

The maximum benefit that the PBGC guarantees is set by law. Only benefits that you have earned a right to receive and that can not be forfeited (called vested benefits) are guaranteed.

PBGC's multiemployer guarantee program is complicated and difficult to summarize quickly. Sometimes people will try to summarize it as a maximum guarantee amount of $12,870 per year. But that is only a special case of the guarantee; it applies to people who worked exactly 30 years in their jobs and have a moderately high promised benefit.

Generally PBGC's guarantee is based on a pension for each year of service you earn under your pension plan. As a monthly benefit amount, PBGC guarantees a payment equal to 100 percent of the first $11 of the Plan's monthly benefit accrual rate, plus 75 percent of the next $33 of the accrual rate, times each year of credited service. If your plan provides a benefit of more than $44 per month per year of service the guarantee disregards that higher level.

The PBGC's maximum guarantee, therefore, is $35.75 per month times a participant's years of credited service.

What does this mean in terms of annual pension amounts for participants with different amounts of service?

If you have:

  • 10 years of service — PBGC will fully guarantee your pension up to an annual amount of $1,320 per year. If your pension exceeds that amount, PBGC will guarantee 75% of the rest of your pension, but not to exceed a total benefit of $4,290 per year.
  • 20 years of service — PBGC will fully guarantee your pension up to an annual amount of $2,640 per year. If your pension exceeds that amount, PBGC will guarantee 75% of the rest of your pension, but not to exceed a total benefit of $8,580 per year.
  • 30 years of service — PBGC will fully guarantee your pension up to an annual amount of $3,960 per year. If your pension exceeds that amount, PBGC will guarantee 75% of the rest of your pension, but not to exceed a total benefit of $12,870 per year.

The PBGC guarantees pension benefits payable at normal retirement age and some early retirement benefits. In calculating a person's monthly payment, the PBGC will disregard any benefit increases that were made under the plan within 60 months before the earlier of the plan's termination or insolvency (or benefits that were in effect for less than 60 months at the time of termination or insolvency). Similarly, the PBGC does not guarantee pre-retirement death benefits to a spouse or beneficiary (e.g., a qualified pre-retirement survivor annuity) if the participant dies after the plan terminates, benefits above the normal retirement benefit, disability benefits not in pay status, or non-pension benefits, such as health insurance, life insurance, death benefits, vacation pay, or severance pay.

Plans Assisted:

  • Since 1980: PBGC has provided financial assistance to 81 multiemployer plans
  • During 2013: 44 plans received assistance

Financial Picture:

  • Until 2003: PBGC's multiemployer insurance program had shown growing financial strength since 1980
  • Since 2003: The program has reported a deficit every year
  • End of FY 2013:
    • The program's deficit stood at $8.3 billion
    • The program had assets of $1.7 billion and total liabilities of $10.0 billion