Multiemployer Pension Plans, the PBGC, and the MPRA

Abstract

Multiemployer pension plans are negotiated between a union and two or more (usually many) employers in an industry. There are over 1,400 of them covering 10.4 million participants and they are insured by the Pension Benefit Guaranty Corporation (PBGC). In the aggregate, they are now woefully underfunded, as is the PBGC’s Multiemployer Program. Congress has enacted several laws in an effort to strengthen the financial position of multiemployer plans and to protect the PBGC. The most recent is the Multiemployer Pension Protection Act of (December) 2014 (MPRA). One of the tenets of pension law has been that retirement benefits once accrued and vested are inviolable. They cannot be curtailed or rescinded. The MPRA allows the trustees of certain distressed multiemployer plans to reduce the benefits of active and inactive participants including retirees in pay status. This paper examines the developments leading up to the MPRA and the underlying problems of multiemployer pension plans and the PBGC.