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PBGC Issues Guidance to Assist Multiemployer Pension Plans Seeking Alternative Payment Rules for Employer Withdrawal Liability

For Immediate Release

WASHINGTON –  The Pension Benefit Guaranty Corporation is issuing guidance to assist multiemployer pension plans that request PBGC review of alternative plan rules for satisfying employer withdrawal liability. The guidance explains PBGC’s review process, the information needed, and factors PBGC considers in reviewing plan proposals.

Under pension law, an employer that withdraws from an underfunded multiemployer plan is responsible for a share of the plan’s unfunded benefit obligations and generally pays withdrawal liability over a period of years. Employer withdrawal liability payments help to compensate plans for the loss of future contributions from the withdrawn employer. Alternative withdrawal liability payment rules differ from the standard statutory payment terms.

PBGC encourages innovative approaches within the current statutory framework in designing alternative rules to address withdrawal liability.

“One way that PBGC helps troubled multiemployer pension plans is to review plan proposals for alternative withdrawal liability payment rules,” said PBGC Director Tom Reeder. “Such rules can help extend plan solvency, encourage continued employer participation and better protect participants’ retirement benefits.”

Alternative payment rules can help troubled multiemployer plans by incentivizing employers to remain in the plan, particularly those employers that might not be able to pay their withdrawal liability.  For example, some proposals include incentives for employers to remain in the plan by providing discounted withdrawal liability that is conditioned on continued employer participation for a specified period of years.

The guidance is responsive to suggestions from multiemployer plan stakeholders for more information and clarity on PBGC’s process for review of alternative plan rules.

Over the past several years, PBGC has observed more interest in alternative payment rule proposals. The proposals can be highly complex, involving analysis of plans’ future cash flows and underfunding under various scenarios. They often involve highly troubled plans and require great care to ensure that the plan participants are not harmed and that the Multiemployer Insurance Program is not put at greater risk.

The agency evaluates all proposals on a case-by-case basis. As part of the guidance, PBGC encourages plan trustees and pension practitioners to discuss their proposals with PBGC in advance of application. Early consultation can shorten the time needed to review the application.

The guidance will be published in the Federal Register on Wednesday, April 4, 2018. It is currently available on the Federal Register Public Inspection page: Request to Review Multiemployer Plan Alternative Terms and Conditions to Satisfy Withdrawal Liability.

About PBGC

PBGC protects the pension benefits of nearly 40 million Americans in private-sector pension plans. The agency operates two separate insurance programs — one covering pension plans sponsored by a single employer and another covering multiemployer pension plans, which are sponsored by more than one employer and maintained under collective bargaining agreements. PBGC is currently responsible for the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and, for the single-employer program, assets and recoveries from failed single-employer plans. For more information, visit

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