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Multiemployer Pension Reform Act of 2014 FAQs

This webpage discusses changes made by the Multiemployer Pension Reform Act of 2014 (MPRA). We will soon be updating other multiemployer information on PBGC.gov to reflect changes made by MPRA.

The Multiemployer Pension Reform Act of 2014 (MPRA) was enacted on December 16, 2014. In the new law, Congress established new options for trustees of multiemployer plans that will potentially run out of money.

Frequently Asked Questions on the Multiemployer Legislation

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 PlansMultiemployer Insurance Program Facts, and Multiemployer Benefit Guarantees.

How do I know if I’m in a multiemployer plan?

Contact your union. Participants in single-employer plans are not affected by the new law.

What kinds of multiemployer plans will be affected by the new law?

When the new law is implemented, trustees of a multiemployer plan that is expected to run out of money in less than 20 years (or 15 years in certain situations) will have the option to seek a reduction of benefit payments under the plan.

How does the new law enable pension benefits to be changed?

The new law provides that trustees of plans that are in danger of failing may apply for a temporary or permanent reduction of pension benefits. In order for changes to take place, the plan trustees have to submit an application showing that pension benefit reductions are necessary to keep the plan from running out of money. Participants will be notified of any proposal to reduce benefits and have the opportunity to comment on the proposal. The new law requires that the application be reviewed by the U.S. Department of the Treasury, in consultation with PBGC and the Department of Labor, to determine if it meets the requirements under federal law. If the application is approved, plan participants and beneficiaries will then have the right to vote on the proposed benefit changes before they can occur.

Does the law include protections for older or disabled participants?

Yes, benefits cannot be reduced for retirees and beneficiaries who are 80 or older. Retirees between ages 75 and 79 would face smaller benefit cuts than retirees under age 75. Also, plan benefits that are based on disability (as defined by the plan) cannot be reduced.

How much could my pension benefit be reduced?

If you are in a plan where benefits could be reduced, the new law states that your benefit cannot be reduced to less than 110 percent of the amount the PBGC guarantees. For example, if your plan currently provides a benefit of $1,500 a month, and if PBGC guarantees $1,000 a month, your plan could not reduce your benefit below $1,100, because that is 110 percent of the amount PBGC guarantees in this example. (The amount PBGC guarantees in a given case depends on various factors, including the rate at which your benefit is earned and your years of service under the plan.)

Do participants have a say in how benefits are reduced?

Yes. Participants will be notified of any proposal to reduce benefits and will have the opportunity to comment on the proposal.

In addition, if the trustees’ proposal to reduce benefits is approved by the U.S. Department of the Treasury, in consultation with PBGC and the Department of Labor, those participants and beneficiaries have the right to vote on the proposed benefit changes before they occur.

For most multiemployer plans, if the majority of participants vote against benefit reductions, they cannot occur. However, the trustees could prepare a new proposal to change benefits and start the process again.

Different rule for large plans

There is a different rule for particularly large and financially troubled multiemployer plans (referred to as “systemically important”). These are plans that will require PBGC assistance valued at more than $1 billion. Even if the participants covered by one of these large and financially troubled plans vote against the benefit reductions, the U.S. Department of the Treasury must permit the implementation of such benefit reductions or a modified version of such reductions developed by the U.S. Department of the Treasury in consultation with PBGC and the Department of Labor.

My pension plan’s trustees sent me a notice stating that the plan was in “endangered,” “seriously endangered” or “critical” status. Does that mean that they will cut benefits?

Not necessarily. Many plans that are in “endangered” or “critical” status have a path to work their way back to health over time, without reducing benefits. Trustees of “critical” status plans have a limited ability to adjust some benefits, but generally cannot reduce normal retirement benefits. Before there are any additional benefit reductions under the new law, your plan’s trustees would have to conclude not only that the financial condition of the plan is “critical,” but that the plan is projected to run out of money. This is referred to as being in “critical and declining” status. Further, the law requires that individuals participating in the plan be notified of any proposal to reduce benefits.

Aren’t there other ways to help keep multiemployer plans from running out of money besides reducing benefits?

The new law provides other options that, in combination with benefit reductions, could help certain plans. The new law allows PBGC to provide financial assistance to eligible plans to pay for certain benefits and to help financially weak plans merge with stronger plans.

When can trustees of multiemployer plans apply for temporary or permanent reductions of benefits?

Trustees should not submit an application until after application procedures have been published. The U.S. Department of the Treasury, in consultation with PBGC and the Department of Labor, will provide guidelines and procedures for preparing and submitting applications.