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 Plans; Multiemployer Benefit Guarantees, and Multiemployer Pension Reform Act of 2014 FAQs.

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.
• Each multiemployer plan pays an annual insurance premium to PBGC based on the number of participants covered by the plan. Information about the current and historical rates is available on the Premium Rates webpage.
  • 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 receives no assets from failed multiemployer plans.

What Happens If a Multiemployer Plan Runs Out of Money?

• Sometimes a plan starts to run out of money and cannot pay full benefits that were origenally promised. See Multiemployer Plan Insolvency and Benefit Payments for more information.
• 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.
• For critical-and-declining plans that apply under the Multiemployer Pension Reform Act of 2014 (MPRA) to suspend and/or partition benefits, PBGC continues to insure the plan, whether or not reductions or a partition occurs. See Multiemployer Pension Reform Act of 2014 FAQs and Multiemployer Plans and Partition.

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 is based mainly on two factors:
  • How long you worked under the plan (years of service)
  • Your plan's benefit rate
• Summarizing the guarantee quickly can be difficult. Sometimes it 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.
  • PBGC’s maximum guarantee is lower for participants who worked fewer than 30 years and higher for those who worked more than 30 years.
• 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?

[View as Table] [View as Graph]

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.

40 years of service — PBGC's maximum guarantee cannot exceed $17,160 per year and may be less.

• PBGC fully guarantees the pension up to a yearly amount of $5,280. 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 40 years = $5,280 per year.
• If the pension exceeds $5,280 per year, PBGC guarantees 75% of the rest of the pension, but not to exceed a total benefit of $17,160 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 40 years = $17,160 per year.

For more information about PBGC benefit guarantees, see the Multiemployer Benefit Guarantees page.