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Multiemployer Pension Plan


The term multiemployer pension plan refers to a collectively-bargained defined benefit plan funded by more than one employer. Multiemployer pension plans typically apply to union workers in the same or similar industries.


Also known as Taft-Hartley plans, multiemployer pension plans are oftentimes found in industries where union members work for a large number of companies over the course of their careers. For example, multiemployer plans are common in a number of industries, including building, construction, entertainment, garment, mining, maritime, and trucking.

The vesting and minimum employment rules of these plans are similar to those of single employer plans. However, defined benefit plans of a single employer are typically a function of years of service and salary, while multiemployer plans are normally calculated using the participant’s years of service multiplied by a fixed dollar amount. Unlike single employer plans, multiemployer pensions are portable from employer to employer.

The amount contributed by each employer is established as part of a collective bargaining agreement (CBA) and paid on a monthly basis. For example, an employer may be required to contribute $4.00 to the fund for each hour worked by the plan’s participant.

These plans are administered jointly by management trustees selected by employers as well as trustees selected by the union. The board of trustees determines the retirement income benefit based on the contributions negotiated between the union and employers in addition to the investment strategy for the pension fund.

Poor investment returns, coupled with an aging workforce, continue to threaten the long-term viability of multiemployer pension plans, which have become increasingly reliant on the Pension Benefit Guaranty Corporation (PBGC) for assistance.

Related Terms

pension plan, defined benefit plan, defined contribution plan