• Contents

  Introduction
• Background on Multiemployer Pension Plans
• Multiemployer Defined Benefit Plan Funding
• Funding Standard Accounts and Funding Deficiencies
• Funding Ratios
• Reporting of Plan Funded Status
• PBGC's Multiemployer Insurance Program
• PBGC Maximum Guarantees
• Financing of PBGC's Multiemployer Program
• Financial Condition of the Multiemployer System Prior to FY2021
• Congressional Actions Related to Improving the Solvency of the Multiemployer System Prior to FY2021
• Special Financial Assistance (SFA)
• Eligibility for Special Financial Assistance
• Amount of Special Finance Assistance
• Conditions on Receiving Special Financial Assistance
• Policy Considerations

Figures

• Figure 1. PBGC Multiemployer Insurance Program Financial Position
• Figure A-1. Typical Balance Sheet of a Defined Benefit Pension Plan
• Figure A-2. How Future Pension Benefits Are Discounted
• Figure A-3. Present Value Formula

Tables

• Table 1. Multiemployer Defined Benefit Plans in 2023
• Table 2. Distribution of Multiemployer Defined Benefit Pension Plans by Funding Ratios in 2023 on an Actuarial Basis
• Table 3. Distribution of Multiemployer Defined Benefit Pension Plans by Funding Ratios in 2023 on an RPA '94 Basis
• Table 4. Multiemployer Defined Benefit Plan Zone Certifications in 2023
• Table 5. PBGC Multiemployer Program Financial Information in FY2025

Appendixes

• Appendix. Defined Benefit Plan Funding

Summary

Multiemployer defined benefit (DB) pension plans are private sector pensions sponsored by more than one employer and maintained as part of a collective bargaining agreement. In 2023, about 3% of all DB pension plans, covering 36Background on Pensions
• Tax-Qualified Pension Plans
• Defined Benefit and Defined Contribution Plans
• Single-Employer, Multiple-Employer, and Multiemployer Pension Plans
• Data on Pension Plans and Participants
• Funding Levels in Multiemployer Defined Benefit Pension Plans
• Background on Multiemployer Defined Benefit Plan Funding
• Reporting of Plan Funded Status
• PBGC Multiemployer Insurance Program
• PBGC Maximum Guarantees
• Financing of PBGC's Multiemployer Program
• Inadequacy of PBGC Premiums and Investment Income
• Current and Future Financial Assistance to Multiemployer Pension Plans
• Plans Currently Receiving Financial Assistance
• Probable Exposure to Future Financial Assistance
• Reasonably Possible Exposure to Future Financial Assistance
• Projections of Insolvency for PBGC's Multiemployer Program
• Multiemployer Defined Benefit Pension Plan Policy Issues
• Likely Insolvency of Some Multiemployer Pension Plans and PBGC Insurance Program
• Multiemployer Pension Reform Act of 2014 (MPRA)
• Applications for Benefit Reductions
• The Joint Select Committee on Solvency of Multiemployer Pension Plans
• The Bipartisan American Miners Act of 2019

Multiemployer defined benefit (DB) pension plans are private-sector pensions sponsored by more than one employer and maintained as part of a collective bargaining agreement. In 2017, about 3% of all DB pension plans, covering 29% of all DB pension plan participants, were multiemployer plans. Nearly all of the remaining DB pension plans were maintained by a single employer. A few DB pension plans were maintained by more than one employer but were not maintained under a collective bargaining agreement. In DB pension plans, participants receive a monthly benefit in retirement that is based on a formula. In multiemployer DB pensions, the formula typically multiplies a dollar amount by the number of years of service the employee has worked for any of the employers that participate in the DB plan.

DB pension plans are subject to funding rules in the Internal Revenue Code (26 U.S.C. §431) designed to ensure they have sufficient resources from which to pay promised benefits. Because single-employer and multiemployer DB pension plans have different structures, Congress has established separate funding rules for these plans.

Although many multiemployer DB pension plans have sufficient resources from which to pay their promised benefits, 10% to 15% of participants are in plans that are projected to become insolvent in the next 20 years. When a multiemployer DB pension plan becomes insolvent (i.e., unable to pay participants the entirety of their promised benefits in a given year), the Pension Benefit Guaranty Corporation (PBGC)—a federally chartered corporation—is to insureinsures the benefits of participants up to a statutory maximum. PBGC operates two separate insurance programs: one for single -employer plans and one for multiemployer plans. PBGC does not become the trustee of insolvent multiemployer DB pension plans; rather, it makes loans to them so that the plans may continue to pay participants' guaranteed benefits.

The projected insolvencies of some multiemployer plans will likely result in the insolvency of PBGC's multiemployer plan insurance program. In the absence of increased financial resources for PBGC, participants in insolvent multiemployer DB pension plans might not receive all of the benefits guaranteed by PBGC. In its FY2018 Projections Report, PBGC indicated that the multiemployer insurance program is highly likely to become insolvent by 2025 and will be

As a result of a number of factors, such as the recessions in 2001 and that from 2007 to 2009, stakeholders became concerned about the financial health of some multiemployer plans, with PBGC indicating in the mid-2010s that 10% to 15% of multiemployer plan participants were in plans that could become insolvent. The projected insolvencies of these multiemployer plans would likely have resulted in the insolvency of PBGC's multiemployer plan insurance program, and, in the absence of increased financial resources, PBGC indicated that the multiemployer insurance program would have been highly likely to become unable to pay 100% of participants' benefits at the guaranteed level.

In response to these concerns, Congress enacted Special Financial Assistance (SFA) in Section 9704 in Title IX, Subtitle H, of the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2). SFA provides financial assistance in the form of grants to eligible financially troubled multiemployer DB pension plans. Plans receiving special financial assistance are expected to be able to pay benefits through 2051.

As of May 15, 2026, 196 SFA applications from 161 plans covering 1.8 million participants had been approved for SFA. The dollar amount of SFA for these approved plans is approximately $77.9 billion.

After adjusting the amount of SFA-approved grants because of plan census adjustments, 67 plans have repaid a total of $261.9 million in SFA. While SFA provides for financial assistance for eligible multiemployer plans, it did not require any structural changes to multiemployer plans.

Introduction

A pension is a benefit offered by employers to assist employees in providing for their financial security in retirement. Department of Labor (DOL) data indicated that 81% of full-time private sector workers in the United States had access to, and 62% participated in, a retirement plan sponsored by their employer in March 2025.¹

A pension is a voluntary benefit offered by employers to assist employees in providing for their financial security in retirement. In 2019, Department of Labor (DOL) data indicated that 61% of full-time private-sector workers in the United States participated in a retirement plan sponsored by their employer.¹ The two types of pension plans are defined contribution (DC) plans, in which participants have individual accounts that can provide a source of income in retirement;, and defined benefit (DB) plans, in which participants receive regular monthly benefit payments in retirement (which some refer to as a "traditional" type of pension).² Pension plans are also classified by whether they are sponsored by one employer (single-employer plans) or by more than one employer (multiemployer and multiple-employer plans). Multiemployer pension plans are typically sponsored by employers in the same industry and maintained as part of a collective bargaining agreement between a union or unions and participating employers. Multiple-employer plans are sponsored by more than one employer but are not maintained as part of a collective bargaining agreement. Multiple-employer pension plans are not common and are not discussed in this report.³

Nearly all private-This report focuses on multiemployer DB pension plans. For an overview of pensions plans, see CRS Report R47119, Pensions and Individual Retirement Accounts (IRAs): An Overview. Nearly all private sector pension plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406), which is enforced by the Department of the Treasury, DOL, and the Pension Benefit Guaranty Corporation (PBGC).⁴3 Because of differences in the structure of the plansplan structures, single, multiple, and multiemployer DB pension plans have different rules under some sections of ERISA. For example, single-employer and multiemployer plans have separate funding rules, and the PBGC's pension insurance programs that cover them function differently.

Congress may be interested in multiemployer DB plans for several reasons, including because

• recent legislation provided for Special Financial Assistance (SFA), in which eligible multiemployer plans in poor financial condition (covering about 10% to 15% of participants in these plans) received grants from the U.S. Treasury to pay participants' benefits through 2051; while the program has disbursed $77.9 billion in grants as of May 15, 2026, some stakeholders have expressed concerns regarding aspects of the program's implementation; and
• absent changes to funding rules, it is possible that a number of currently financially healthy multiemployer plans could become insolvent in future years and require financial assistance from PBGC.

Prior to the enactment of SFA (in Section 9704 in Title IX, Subtitle H, of the American Rescue Plan Act of 2021 [P.L. 117-2]), Congress had expressed concern about the multiemployer system's finances for years. As a result of the 2007-2009 recession and market downturn, the financial condition of some multiemployer plans worsened to the point that PBGC projected a large increase in plan insolvencies. A large increase in plan insolvencies would likely have resulted in the insolvency of PBGC's multiemployer insurance program, which is financed by premiums that multiemployer plans pay. The insolvency of PBGC would have led to reduced benefits for participants in plans receiving PBGC financial assistance.

As of May 15, 2026, 196 SFA applications from 161 plans covering 1.8 million participants had been approved for $77.9 billion in SFA.⁴ As a result, many multiemployer plans that were expected to become insolvent are now able to pay benefits through 2051, and the PBGC's multiemployer insurance program is operating with a surplus. The final deadline for submitting an application for SFA was December 31, 2025. ⁵

The two kinds of pension plans are DC and DB pension plans. In a DC plan, of which the 401(k) is the most common, participants and/or their employer make regular contributions to a tax-advantaged retirement account. The contributions are invested, most often in mutual funds or collective investment trusts (CITs), and the accumulated contributions and earnings, if any, are used as a source of income in retirement.

In DB plans, employers make contributions to a trust from which benefits are paid to participants in retirement. An employee's benefit is typically paid as a monthly payment for the life of the participant and, if married, to the spouse. Some DB plans allow participants to receive the benefit as an equivalent, lump-sum payment. The amount of the participant's benefit is calculated using a formula based on either (1) an accrual rate, length of employment, and salary or (2) a flat dollar amount times the number of months or years in the plan.

Participants' DB benefits must be prefunded; that is, the employer must make an annual contribution to the plan to pay for the amount of benefits earned by participants in that year, even though the benefits may be paid many years in the future. An employer's contribution may include additional amounts if the plan is underfunded as a result of past investment losses.

Most DB plans are sponsored by one employer for the benefit of eligible workers of the company. However, multiemployer DB plans are sponsored jointly by a union and the employers who are part of a collective bargaining agreement (CBA) with the union. Employer contributions to the DB plan are typically established in the CBA and are typically expressed as a dollar amount per hour worked.

Many multiemployer plans are in unionized industries such as construction, manufacturing, and transportation. Because a union member might work for several employers who participate in the CBA, the union member continues to earn benefits in a single DB plan.

Multiemployer DB pension plans pool risk so that the withdrawal of a few employers from the plan does not place the plan in financial jeopardy, because when a company wishes to exit a multiemployer DB plan, the company is responsible for paying its withdrawal liability, defined as its share of unfunded vested benefits (i.e., benefits to which participants have a contractual right but for which the plan has insufficient assets to pay).⁶ In some instances, employers do not pay the full amount of their assessed withdrawal liability because they either negotiate a lower amount or have declared bankruptcy.

The 2007-2009 recession and associated declines in the value of plan assets as a result of stock market losses resulted in the underfunding of many plans, some of which were significantly underfunded. In addition, an increasing number of employers left multiemployer pension plans (either voluntarily or through employer bankruptcy). Exiting employers leave behind plan participants with vested benefits (sometimes called orphan participants because they do not have an employer that will make additional contributions to the plan for their unfunded benefits).⁷ The existence of orphan plan participants can result in a worsening funding situation for the multiemployer plan, because (1) the underfunding becomes the responsibility of the remaining employers in the plan⁸ and (2) DB plan assets are commingled in a trust and are not assigned to a particular employer's contributions or participant's benefit. Thus, benefit payments for all participants draw down general plan assets. The remaining employers might have difficulty meeting the increases in required contributions, which could cause employers to become bankrupt and could threaten the solvency of some multiemployer plans (which some refer to as a death spiral).⁹

Number of plans and participants; total assets in plans

Background on Pensions

Tax-Qualified Pension Plans

Defined Benefit and Defined Contribution Plans

Single-Employer, Multiple-Employer, and Multiemployer Pension Plans

Data on Pension Plans and Participants

Table 1 provides information on the number of single- and multiemployer DC and DB pension plans in 2017 (the most recent year for which data are available) and the number of active and retired participants by plan type. In 2017, there were 1,398 multiemployer DB pension plans that covered 10.5 million participants, of which 40% were active participants, meaning that 60% were retired (thus receiving benefits). DB pension plans that have high percentages of active workers are better able to rely on future contributions from plan sponsors to make up for plan underfunding. This is because, on a per participant basis, employers' contributions toward the underfunding will be lower in plans with higher percentages of active workers.

Funding Levels in Multiemployer Defined Benefit Pension Plans

Background on Multiemployer Defined Benefit Plan Funding

DB pension benefits are accrued by eligible employees while working. The benefit is paid, typically as a monthly annuity, during the worker's retirement. The benefits in DB plans subject to ERISA are required to be prefunded, which means that in each year the plan sponsor sets aside adequate funds, taking into account expected future investment returns, for pension benefits earned in that year.¹⁹15 Plan sponsors may also be required to make additional contributions for investment losses that occurred in previous years, as well as increases in the present value of future plan obligations. Plan participants receive their monthly benefit in retirement from these funds that have been set aside.

The required contributions for employers in multiemployer DB pension plans are fixed for several years as established in collective bargaining agreements. Various situations have led to many pension plans havingCBAs. Even if plans make their required contributions each year, various situations may arise that cause a plan to become underfunded (i.e., have a smaller amount of funds than the amount of benefits that have been promised by the plan). These situations include (1) declines in the values of plan assets (such as occurred during thewhich can occur during stock market decline in 2008) anddeclines), (2) increases in the current value of future benefit obligations (such as occurred when interest rates declined as a result of the Federal Reserve's efforts to strengthen the economy). Appendix A provides background for understanding pension plan funding issues.

which can occur when the Federal Reserve lowers interest rates), or (3) changes in plan assumptions (such as mortality assumptions, which are assumptions about how many participants will receive plan benefits and the length of time that they will receive them).¹⁶ Funding Standard Accounts and Funding Deficiencies

Multiemployer DB plans keep track of their funding with a funding standard account, which facilitates the administration of funding requirements. Charges (debits) to the account reduce the account balance and include the cost of benefits earned by participants during the year and investment losses.²⁰17 Credits increase the funding standard account balance and include employer contributions to the plan and investment gains.²¹

18 When the total credits to a multiemployer DB pension plan exceed the total charges, the plan has a "credit balance" and no contributions are required until future charges eliminate the credit balance. When the total charges exceed the total credits, a funding deficiency results and additional contributions to the plan may be required.

Funding Ratios

A plan's funding ratio is a common measure used to assess the plan's financial health. A plan with a funded ratio of 100% has sufficient assets to pay all promised benefits. In contrast, a plan with a funded

Pension funding consists of several elements. These include the value of plan benefits that participants will receive in the current and in future years, the amount a plan has set aside to pay for these benefits, and the employer contributions required each year to ensure the plan has sufficient funds to pay benefits when participants retire.

A pension plan's benefits are a liability spread out over many years in the future. These future benefits are calculated and reported as present values (also called current values). Using a formula, benefits that are expected to be paid in a particular year in the future are calculated so they can be expressed as a present value.¹⁹ This process is called discounting, and it is the reverse of the process of compounding, which projects how much a current dollar amount will be worth at a point in the future.

DB plan assets are the value of the investments made with accrued employer (and employee, if any) contributions to the plan. The investments are typically short-term securities (such as Treasury bills), equity (such as corporate stock), debt (such as corporate bonds), and alternative investments (such as private equity).

.21 Table 2 provides the distribution of funding ratios in 2016 (the most recent year for which PBGC data are available)on an actuarial basis for the 2023 plan year among (1) multiemployer DB pension plans and (2) the participants in these plans. SevenOne hundred seventy-five plans, or 56.4% of all multiemployer DB plansand one plans, covering 1.2 million participants, had a funding ratio of less than 50%. These 775101 plans had about 7.81.2 million participants, or 74.310.6% of all multiemployer DB plan participants in 2016—suggesting that some of the poorly funded plans have large numbers of participants.

Reporting of Plan Funded Status

The Pension Protection Act of 2006 (PPA; P.L. 109-280) requires that the actuary of a multiemployer DB pension plan annually certify the plan's status in one of three categories—known as the plan's zone status—based on, among other factors, the funded status of the plan.²⁴ A plan can be in critical status, endangered status, or neither category. A plan in critical or endangered status must take measures to improve its financial conditions. The PPA provisions that created the zone status were scheduled to sunset on December 31, 2014, but were made permanent by Multiemployer Pension Reform Act of 2014, enacted as Division O in the Consolidated and Further Continuing Appropriations Act, 2015 (MPRA; P.L. 113-235). In addition, MPRA added critical and declining as a fourthan additional funded status category. These zone statuses are presented below in order from strongest to weakest financial status.

Plans that are in Table 4 provides the number of multiemployer DB plan certifications within each funded status category for 1,188 plans that reported their plan status for the 2023 plan year (the most recent year for which complete information is available).

Green (No Zone) Status

Table 3 provides the number of multiemployer DB plan certifications within each funded status category for 1,229 plans that reported their plan status in 2017 (the most recent year for which complete information is available).

Endangered (Yellow Zone) Status

A plan is in endangered status if (1) the plan's funding ratio is less than 80%, or (2) the plan has a funding deficiency in the current year or is projected to have one in the next six years. A subcategory of endangered status is seriously endangered (orange zone). A plan is seriously endangered if it meets both of these criteria.

Plans in endangered status must adopt a funding improvement plan, which is a range of options (such as increased contributions and reductions in future benefit accruals) that, when adopted, will reduce the plan's underfunding²⁵ by 33% during a 10-year result in an increase in the plan's funded percentage by the end of the funding improvement period. Plans in seriously endangered status must adopt a funding improvement plan that will reduce underfunding by 20% during a 15-year funding improvement period. Plans in endangered or seriously endangered status cannot increase benefits during the funding improvement period.

Plans in. The increase in the funded percentage must equal or exceed the sum of (1) the plan's funded percentage as of the beginning of the first plan year in which it is considered endangered and (2) 33% of the difference between 100% and the plan's funded percentage as of the beginning of the first plan year in which the plan is in endangered status. For example, a plan with a funded percentage of 70% at the beginning of the first year in which it is considered endangered must adopt a plan that would improve its funded percentage to at least 79.9% (100% minus 70% is 30%; 33% of 30% is 9.9%; and 70% plus 9.9% equals 79.9%)²³ Plans in seriously endangered status adopting a funding improvement plan must increase their funded status in a similar way, though substituting "20%" for "33%." Plans in endangered status or seriously endangered status must provide notice to plan participants, beneficiaries, the collective bargaining parties, PBGC, and DOL.²⁶

24 Critical (Red Zone) Status

A plan is in critical status if any of the following conditions apply: (1) the plan's funding ratio is less than 65% and the value of the plan's assets and contributions will be less than the value of benefits in the next six years; (2) in the current year, the employers are not expected to make 100% of the required contributions, or the employers are not expected to make 100% of the required contributions for any of the next three years (four years if the plan's funding ratio is 65% or less); (3) the plan is expected to be insolvent within five years (within seven years if the plan's funding ratio is 65% or less); or (4) the cost of the current year's benefits and the interest on unfunded liabilities are greater than the contributions for the current year, the present value of benefits for inactive participants is greater than the present value of benefits for active participants, and there is expected to be a funding deficiency within five years.

Plans in critical status must adopt a rehabilitation plan. A rehabilitation plan is a range of options (such as increased employer contributions and reductions in future benefits accruals) that, when adopted, will allow the plan to emerge from critical status duringby the end of a 10-year rehabilitation period. If a plan cannot emerge from critical status by the end of the rehabilitation period using reasonable measures, it must either install measures to emerge from critical status at a later time (after the end of the rehabilitation period) or forestall insolvency. Plans in critical status may not increase benefits during the rehabilitation period.

Plans in critical status must provide notice to plan participants, beneficiaries, the collective bargaining parties, PBGC, and DOL.²⁷

25 Critical and Declining (Deep Red Zone) Status

A plan is in critical and declining status if (1) it is in critical status and (2) the plan actuary projects the plan will become insolvent within the current year or within either the next 14 years or the next 19 years, as specified in law. Plans in critical and declining status must provide notice to plan participants, beneficiaries, the collective bargaining parties, PBGC, and DOL.²⁸

PBGC Multiemployer Insurance Program

PBGC is a federal government agency created by ERISA in 1974 to protect the benefits of participants in private-

862 (72.6%)

7,199,336 (66.9%)

Endangered (Yellow Zone)

46 (3.9%)

368,082 (3.4%)

Seriously Endangered (Orange Zone)

1 (0.1%)

1290 (0.0%)

Critical (Red Zone)

155 (13.0%)

2,169,422 (20.2%)

Critical and Declining (Deep Red Zone)

124 (10.4%)

1,019,324 (9.5%)

All Plans with Zone Status

1,188

10,757,454

PBGC Maximum Guarantees

PBGC guarantees benefits in pension plans up to a statutory maximum level. When a multiemployer DB pension plan becomes insolvent, the plan must reduce participants' benefitbenefits to the PBGC maximum amount before the plan receives the assistance. The statutory maximum benefit in multiemployer plans that receive financial assistance from PBGC is the product of a participant's years of service multiplied by the sum of (1) 100% of the first $11 of the monthly benefit accrual rate and (2) 75% of the next $33 of the accrual rate. For a participant with 30 years of service, the statutory monthly maximum benefit is $1,073, or an annual maximum benefit of $12,870 per year.²⁹27 The multiemployer guarantee limit has been unchanged since 2001.

Financing of PBGC's Multiemployer Program

PBGC's multiemployer insurance program receives revenues from two sources: (1) premium revenue paid by the sponsors of multiemployer pension plans and (2) interest income from holdings of the U.S. Treasury debt Unlike the single-employer insurance program, PBGC does not become trustee of insolvent multiemployer pension plans. For this reason, the only sources of funding for the financial assistance to insolvent multiemployer pension plans are (1) the collection of premiums that multiemployer plan sponsors pay to PBGC and (2) interest income from the investment of past premium income in U.S. Treasury bonds. Premium revenue is, by law, placed in a revolving fund. PBGC's policy is to invest the assets in the revolving fund in U.S. Treasury securities.³⁰

At the end of FY2019, PBGC reported a deficit of $65.2 billion in the multiemployer insurance program.³¹ If a sufficient number of multiemployer pension plans exhaust their plan assets and become unable to pay promised benefits, it is likely that PBGC's multiemployer program would also exhaust its assets. Table 4 summarizes PBGC's financial information in FY2019.

PBGC Premium Levels

28 If the amount of financial assistance were to exceed the amount of premium revenue, then the revolving fund containing the investments in U.S. Treasury bonds could become depleted. At the end of FY2025, PBGC reported a surplus of $2.6 billion in the multiemployer insurance program.²⁹

PBGC Premium Levels

PBGC Premium and Investment Income in FY2019

PBGC reported $310 million in premium income from multiemployer plans in FY2019.³³FY2025.³¹ PBGC also reported a gain of $442143 million in investment income from holdings of the U.S. Treasury debt. Table 5 summarizes PBGC's financial information in FY2025. Table 5. PBGC Multiemployer Program Financial Information in FY2025

Financial Assistance

Traditional Financial Assistance Paid

$169 million

Number of Plans Receiving Traditional Financial Assistance

100

$6,152 billion

Number of Plans Receiving Special Financial Assistance (SFA)^a

48

Income

Premium Income

$426 million

Investment Income

$143 million

Net Position

Total Assets

$4.9 billion

Present Value of Future Financial Assistance

$1.9 billion

Net Position (Total Assets Minus Present Value of Future Financial Assistance and Other Liabilities)

$2.6 billion

Inadequacy of PBGC Premiums and Investment Income

Table 4 shows that in FY2019, PBGC's multiemployer program had a deficit of $65.2 billion. This deficit was largely driven by the $68 billion in present value of nonrecoverable future financial assistance—the estimated (and nonrecoverable) payments that PBGC would have to provide at any point in the future to 191 multiemployer plans that are (1) currently receiving financial assistance, (2) terminated but have not yet started receiving financial assistance, or (3) expected to become insolvent within 10 years and would not be able to meet their benefit obligations.³⁴

Current and Future Financial Assistance to Multiemployer Pension Plans

Plans Currently Receiving Financial Assistance

Probable Exposure to Future Financial Assistance

Reasonably Possible Exposure to Future Financial Assistance

Projections of Insolvency for PBGC's Multiemployer Program

Multiemployer Defined Benefit Pension Plan Policy Issues

Likely Insolvency of Some Multiemployer Pension Plans and PBGC Insurance Program

Multiemployer Pension Reform Act of 2014 (MPRA)

Many of the provisions were in a 2013 proposal put forward by the National Coordinating Committee for Multiemployer Plans (NCCMP), which is an organization that represents a number of multiemployer pension plans.⁵² NCCMP created a Retirement Security Review Commission (the commission) to gather input from a coalition of employers and labor groups for multiemployer DB pension reform proposals. In February 2013, the commission issued a report to advance a proposal that it indicated would reform and strengthen the multiemployer pension system.⁵³ The commission proposed the following: (1) reforms to existing funding rules for multiemployer pension plans; (2) solutions to address deeply troubled multiemployer DB pension plans (plans that are expected to become insolvent in the next 10 years); and (3) a new plan design that would, among other provisions, allow participant benefits to vary based on a plan's investment performance. MPRA contained provisions that reformed some existing funding rules and addressed the problems of deeply troubled plans. MPRA did not contain any provisions related to new plan designs.⁵⁴ Details of the provisions of MPRA are in Appendix B.

Applications for Benefit Reductions

The Joint Select Committee on Solvency of Multiemployer Pension Plans

The Bipartisan American Miners Act of 2019

Appendix A. Defined Benefit Plan Funding

Figure A-1 depicts a typical DB pension plan's balance sheet. It consists of plan assets, which are the value of the investments made with accrued employer (and employee, if any) contributions to the plan, and plan liabilities, which are the value of participants' benefits earned under the terms of the plan. Plan assets are invested in equities (such as publicly traded stock), debt (such as the U.S. Treasury and corporate bonds), private equity, hedge funds, and real estate.

Figure A-1. Typical Balance Sheet of a Defined Benefit Pension Plan

Source: Congressional Research Service (CRS).

a. Special Financial Assistance (SFA) provides grants to financially troubled multiemployer plans and was passed in Section 9704 in Title IX, Subtitle H, of the American Rescue Plan Act of 2021 (P.L. 117-2). SFA is discussed later in the report. From December 21, 2021, through May 15, 2026, 196 SFA applications from 161 plans covering 1.8 million participants have been approved for $77.9 billion in SFA. Financial Condition of the Multiemployer System Prior to FY2021 Prior to FY2021, the multiemployer system and, relatedly, the PBGC's multiemployer insurance program were in poor financial condition. Figure 1 shows the financial condition of PBGC's multiemployer program from FY2014 through FY2025. The large increase in the deficit—reaching a peak of $65.2 billion in FY2019—was a result of the recognition of the likely insolvency of several large multiemployer plans. In FY2021, Special Financial Assistance (SFA) was passed in Section 9704 in Title IX, Subtitle H, of the American Rescue Plan Act of 2021 (P.L. 117-2) to provides grants to financially troubled multiemployer plans. SFA is discussed later in the report. As a result of the enactment of SFA, the multiemployer program has run a surplus since FY2021.

FY2015–FY2025

Notes: PV indicates present value.

Congress had expressed concern about the multiemployer program for years leading up to the enactment of SF in FY2021 A. Prior to the enactment of SFA in FY2021, about 10% to 15% of multiemployer plan participants were in plans that PBGC expected to become insolvent. Two of the largest multiemployer plans, the Central States, Southeast and Southwest Areas Pension Plan (Central States) and the United Mine Workers of America (UMWA) 1974 Pension Plan, were both expected to become insolvent and, had that occurred, would have resulted in the insolvency of the PBGC's multiemployer insurance program. In its plan year 2021 filing, Central States, which covered over 350,000 participants and paid out annual benefits of $2.9 billion, indicated a projected insolvency date of 2025.³² In 2019 (prior to receiving federal financial assistance, as detailed later in this report), the UMWA plan, which covered about 90,000 participants and paid out over $500 billion in benefit payments that year, indicated an insolvency date of 2022 or 2023.³³

Insolvent plans are eligible for traditional financial assistance from PBGC. However, while PBGC historically had sufficient assets from which to provide financial assistance to insolvent plans, PBGC's financial condition was such that the benefit obligations from plans that were likely to become insolvent between 2020 and 2030 would likely have resulted in PBGC having insufficient resources from which to pay guaranteed benefits owed to plan participants.

At the time, PBGC indicated that once resources were exhausted in its multiemployer program, insolvent plans would be required to reduce benefits to levels that could be sustained through premium collections only. This would have meant that participants' benefits would have been cut to levels below the maximum benefit.³⁴ PBGC estimated that most participants would have received less than $2,000 per year because PBGC would have only been able to provide annual financial assistance equal to its annual premium revenue, which averaged $365.6 million per year from FY2021 to FY2025.³⁵

For participants' benefits to be paid at the guaranteed amount, either (1) premiums would have had to rise to levels that many plan sponsors, plan participants, and policymakers would have found unreasonable or (2) federal financial assistance to PBGC would have been required. In 2016, PBGC estimated that premium levels would have needed to increase in the range of 59% to 85% to ensure solvency over the subsequent 10 years and in the range of 363% to 552% to ensure solvency over the subsequent 20 years.³⁶

After the 2007-2009 recession, some Members of Congress expressed interest in addressing the challenges faced by the sponsors of multiemployer DB pension plans and by PBGC's multiemployer insurance program.³⁷ For example, the House Education and Workforce Committee (including the Health, Employment, Labor, and Pensions subcommittee) held six hearings in 2012 and 2013 addressing multiemployer pension policy issues.³⁸

In 2014, Congress enacted the Multiemployer Pension Reform Act of 2014 (MPRA; P.L. 113-235) to address the projected increase in plan insolvencies and provide options to improve funding for multiemployer plans. Among other provisions, MPRA allows financially distressed plans that meet certain conditions to apply to the U.S. Treasury for permission to reduce participants' benefits to stave off insolvency. In 2015, one relatively large plan, the Central States plan, applied to reduce benefits. In 2016, its application was denied.³⁹ As of the date of this report, 18 plans have been approved to reduce benefits under MPRA. The most recent approval occurred in 2020, and the most recent application to reduce benefits under MPRA was submitted on February 26, 2021, and was subsequently withdrawn.⁴⁰

In addition, the Bipartisan Budget Act of 2018 (P.L. 115-123), enacted on February 9, 2018, created the Joint Select Committee on Solvency of Multiemployer Pension Plans to address the impending insolvencies of several large multiemployer DB pension plans and PBGC, but the committee did not provide legislative language by its November 30, 2018, deadline.⁴¹

In 2019, Congress enacted the Bipartisan American Miners Act of 2019 (enacted as Division M of The Further Consolidated Appropriations Act, 2020 [P.L. 116-94]), which authorized annual general fund payments to the UMWA 1974 Pension Plan to address the solvency of that plan. The act established a new cap of $750 million annually on the aggregate amount of General Fund payments to certified states and tribes, UMWA health benefit plans, and the UMWA pension plan combined.⁴² The cap serves as a mechanism to control federal direct spending from the U.S. Treasury. After in lieu payments to certified states and tribes and supplemental payments to the UMWA health benefit plans each fiscal year, the act authorizes any remaining amount within the $750 million annual cap to be transferred to the UMWA pension plan. The federal financial assistance to the UMWA plan is projected to prevent its insolvency.

Section 9704 in Title IX, Subtitle H, of the American Rescue Plan Act of 2021 (P.L. 117-2) provided financial assistance in the form of grants to eligible financially troubled multiemployer DB plans. Specifically, it established a fund within the PBGC and appropriates from the general fund "such amounts as are necessary" to provide Special Financial Assistance (SFA) to certain multiemployer DB plans and necessary administrative and operating expenses. SFA does not have to be repaid. Following the enactment of SFA, the PBGC's financial assistance program for insolvent multiemployer plans not eligible for SFA began to be referred to as traditional financial assistance (and continues to operate alongside SFA).

As of May 15, 2026, 196 SFA applications from 161 plans covering 1.8 million participants have been approved for SFA.⁴³ The dollar amount of SFA for these approved plans is approximately $77.9 billion.⁴⁴

PBGC maintains a list of plans that have submitted applications for SFA, been approved for SFA, been denied SFA, or withdrawn their SFA applications. This list includes the amount of SFA requested by each plan, and, if approved, the amount paid to each plan. PBGC updates this list on a weekly basis.⁴⁶

Among the plans that were approved for SFA as of May 15, 2026,

• 90 were approved because they met the condition of having been in in critical and declining status in any plan year from 2020 through 2022,
• 18 were approved because they had their benefits suspended under MPRA,
• 33 were approved because they were in critical status and met the additional required criteria, and
• 20 were approved under the insolvency condition.

Additionally, 178 plans had submitted and subsequently withdrew their applications for SFA and all but 24 reapplied for SFA. Three plans were denied SFA: two based on their ineligibility for SFA and one for an incomplete application.

The amount of SFA is the amount needed to pay participants' full plan benefits through the 2051 plan year. To determine the present value of benefits, the plan must use the interest rate from its most recent zone certification before January 1, 2021, subject to a maximum limit. The limit is the interest rate used by single-employer DB pension plans to discount their benefits to be paid 20 years or more in the future (referred to as the third segment rate in Title 26, Section 430(h)(2)(C)(iii), of the U.S. Code) prior to adjustment for the funding corridor in the month (or preceding three months) of the application, increased by two percentage points.⁴⁷ In February 2021, the third segment rate was 3.59%, so the limit would have been 3.59% + 2.0% = 5.59%.⁴⁸ The median interest rate multiemployer plans used to value benefit obligations in 2022 and 2023 was 7.0%.⁴⁹ Using lower interest rates results in larger amounts of SFA.

SFA is paid to the plan as a lump sum, is kept separate from other plan assets, and must be invested only in investment-grade bonds or other securities as determined by PBGC.

Participants' benefits in plans receiving SFA are not to be reduced to the PBGC maximum guarantee.

Section 9704 of the law imposes a number of conditions on plans that receive SFA regarding, among other things, participants' benefits, withdrawal liability, and PBGC premiums.

A plan that had previously received approval for benefit suspensions under MPRA is required to (1) reinstate the benefits and (2) provide payments for benefits that participants and beneficiaries had not received because of the benefit suspensions.

PBGC could impose reasonable conditions on plans receiving SFA relating to increases in future accrual rates, retroactive benefit improvements, allocation of plan assets, reductions in employer contribution rates, diversion of contributions to—and allocation of—expenses to other benefit plans, and withdrawal liability. PBGC could not impose conditions relating to prospective reductions in plan benefits, changes to plan governance, or funding rules relating to receiving SFA.

Plans that receive SFA continue to pay PBGC premiums, are deemed to be in critical status through the plan year ending in 2051, and are ineligible to apply for MPRA benefit suspensions.

Some proponents viewed federal financial assistance to multiemployer plans as fulfilling part of a promise made to workers.⁵⁰ Opponents argued that it is inappropriate to provide federal financial assistance to private sector pension plans.⁵¹

Simulations by the Congressional Budget Office in February 2021 indicated that an average of 185 plans would receive $86 billion in special financial assistance.⁵² In a September 2022 letter, CBO indicated that SFA would total $90.4 billion from FY2022 to FY2032.⁵³ CBO stated that the cost increase was a result of differences between the interim final rule which was the basis for CBO's 2021 estimate and the final rule adopted by PBGC in July 2022.

An earlier estimate from CBO indicated that PBGC's multiemployer program would remain solvent through the mid-2040s.⁵⁴ Because SFA allows plans to delay or prevent insolvency, CBO estimated that PBGC would spend $2 billion less in financial assistance to these plans. Retirees would pay $1.7 billion in federal income taxes on benefits that would not have been received in the absence of SFA.

Participants in multiemployer plans that receive SFA do not have their benefits reduced to the PBGC maximum benefit level. Plans that became insolvent prior to December 14, 2014, reduced participants' benefits to PBGC maximum guarantee levels. These plans are ineligible for SFA. In addition, under current law, participants in plans that become insolvent in the future (beyond the application window for SFA) will have their benefits reduced to the PBGC maximum guarantee.

Amount of Special Financial Assistance

The interest rate is an important component for determining the amount of SFA paid to qualifying plans. Because the law's specified interest rate limit is typically lower than the median interest rate used by plans when calculating the value of benefits for plan funding purposes, for most plans, the value of benefits for SFA purposes is larger than the actuarial value of these benefits.

Greater Benefit to Certain Employers

Certain employers (e.g., the United Parcel Service and Kroger) pledged to "top up" the benefits of some retired former employees in certain plans if they are reduced as a result of PBGC traditional financial assistance or MPRA. Because SFA does not require plans to reduce participants' benefits, these employers potentially benefited financially by not having to make the top-up payments for participants in plans that received SFA.⁵⁵

No Structural Changes to Plans

The law did not impose any changes to the structure of multiemployer DB plans or plan funding rules to ensure that currently financially healthy plans do not need financial assistance in the future. It is possible that some plans, including some that received SFA, may need financial assistance in the future.

Interest Rate on Plan Assets in SFA Applications

Some stakeholders raised concerns over the assumption that plans make on the interest rates of their SFA assets.⁵⁶

In determining the amount of SFA a plan needs, a plan sums the amount of benefits it expects to pay through 2051 and subtracts the amount of resources it expects to have available through 2051. The amount by which expected benefits exceeds expected resources is the amount of SFA a plan would receive.

The amount of resources includes (1) a plan's assets, which are the accumulated contributions from employers participating in the plan, and (2) the investment returns on the plan assets. Because SFA is received as a lump-sum payment and is also invested, the expected investment returns on SFA assets are also included as part of a plan's resources. Plans must make assumptions about the expected interest rate (also called the expected rate of return) on plan investments to determine the projections.

The provision authorizing SFA requires that SFA funds be (1) segregated from non-SFA assets and (2) invested conservatively.⁵⁷ In general, the more conservative an investment portfolio, the lower the expected rate of return on those invested assets.⁵⁸ As a result, one of the topics that PBGC addressed in regulations was the interest rate permitted for SFA and non-SFA assets.⁵⁹

PBGC's Interim Final Regulation (IFR) called for the same interest rate to be used for projecting the rate of return on both SFA and non-SFA assets, while the final regulation indicated that plans could use separate (referred to as bifurcated) interest rates for the expected rates of return on SFA and non-SFA assets.⁶⁰

In the IFR, PBGC wrote that it "does not have authority to provide a different rate or bifurcate the statutorily mandated interest rate."⁶¹ A number of comment letters on the IFR mentioned that using the same interest rates for SFA and non-SFA assets would cause plans to receive less SFA than would be needed to keep plans solvent through 2051. For example, a comment letter from seven Democratic Senators noted that possible results of requiring plans to use a single interest rate risks negative outcomes that "were not consistent with Congressional intent."⁶²

PBGC's final regulation changed its position from the IFR, indicating that "after further review of the statute, PBGC observes that section 4262(e) of ERISA is general in its language regarding the determination of the amount of SFA and does not speak directly to the precise question of the use of an interest rate to project returns on SFA assets."⁶³

On August 10, 2022, PBGC's Office of the Inspector General (OIG) requested an opinion from the U.S. Government Accountability Office (GAO) on the use of bifurcated interest rates, and on September 8, 2022, the PBGC OIG issued a Risk Advisory.⁶⁴ The Risk Advisory noted that because PBGC had already approved SFA applications with bifurcated interest rates, then "if GAO's decision were to contradict PBGC's position in its Final Rule, SFA payments, made while the decision was pending, risk being deemed improper payments, and additionally raise a reputational risk for PBGC."⁶⁵

On September 30, 2022, a Congressional Budget Office (CBO) letter indicated that as a result of changes to the Final Rule, the total amount of SFA was projected to increase from $85.9 billion to $90.4 billion.⁶⁶ That same day, the House Education and Workforce Committee sent a letter to the PBGC director asking, among other things, the "specific Congressional authority for the July 2022 final rule's use of two separate interest rates for calculating SFA under ARPA."⁶⁷

On August 9, 2023, GAO concluded that "PBGC used its ARPA appropriation for its stated purpose and as such, neither the purpose statute nor the Antideficiency Act are violated by PBGC's interest rate determinations."⁶⁸

SFA Overpayments for Deceased Participants

A March 2023 report by the PBGC's OIG indicated that it was likely that PBGC approved SFA applications in which some of the participant counts included deceased participants.⁶⁹ As a result, PBGC may have made improper payments to these plans.⁷⁰ PBGC's OIG conducted an audit of five plans and found that the deceased participants included in SFA counts were participants who were no longer active participants in the plan (i.e., they no longer worked for an employer participating in the plan) but were not yet receiving benefits from the plan (because they were not yet retired). These participants are referred to as terminated vested participants.⁷¹

Deceased participants were included in participant counts when some plans submitted their SFA applications based on the instructions in PBGC's IFR. The IFR did not require plans to conduct a death audit by cross-checking the participant census with death files. In addition, when applying for SFA, plans were required to use the assumptions in their most recent plan certification before January 1, 2021.⁷² In some cases, participants became deceased between the time of their plans' application submissions (using data as of the plan certification date) and their plans' approvals for SFA.

The final regulation required documentation of a death audit.⁷³ However, a subsequent PBGC OIG report from June 2023 noted that plan death audits might not be satisfactory in identifying deceased participants because they rely on private companies to verify participants' statuses and are prone to making errors.⁷⁴ PBGC noted that the problem may be especially acute for separated, vested participants.

In PBGC's single-employer and multiemployer insurance programs, PBGC checks participant censuses against Social Security's Death Master File (DMF), which is a file compiled by the Social Security Administration (SSA) that includes over 90% of all deaths in the United States. Only selected federal agencies have access to the full DMF.⁷⁵ The June 2023 PBGC OIG white paper noted that PBGC indicated that it intended to request the plan census underlying an SFA request and perform an independent death search on the file. The OIG paper stated that it was its understanding "that PBGC will use the Full DMF" to conduct such searches.⁷⁶

In November 2023, Senator Bill Cassidy sent a letter to Sean O'Brien, General President of the International Brotherhood of Teamsters (a union whose members constituted many of the Central States plan participants), that inquired how deceased participants were included in the SFA application and whether the Central States plan intended to return the $127 million attributable to them.⁷⁷ At a Senate Health, Education, Labor, and Pensions (HELP) committee hearing, Senator Cassidy received a commitment from Mr. O'Brien that the plan would return the money.⁷⁸

DOL issued a statement that indicated that while plans may have expressed concerns that returning excess payments could violate fiduciary obligations, DOL would not take any enforcement action against plans that return excess amounts of SFA.⁷⁹ On March 15, 2024, PBGC issued a statement that it "supports the Department of Labor's (DOL) position that such repayments would not violate" ERISA or the Internal Revenue Code.⁸⁰

In the 118^th Congress, on January 30, 2024, Representative Virginia Foxx introduced H.R. 7135, and Senator Bill Cassidy introduced S. 3682, The GHOST Act, identical bills that would have required PBGC to audit plans that were approved for SFA to determine whether a plan had received any amounts of SFA on behalf of deceased participants. Plans would have been required to repay the PBGC for any SFA overpayments.

On April 8, 2024, Central States entered into an agreement with the Department of Justice to repay the funds.⁸¹ Also on April 8, 2024, PBGC indicated that Central States had repaid the money.⁸²

In the 119^th Congress, some members continued to conduct oversight of this issue. For example, a February 20, 2025, letter from Representative Tim Walberg, Chairman of the House Committee on Education and Workforce, and Representative Rick Allen, Chairman of the Subcommittee on Health, Employment, Labor, and Pensions, to Attorney General Pamela Bondi, sought information "about the steps DOJ is taking to ensure that taxpayer money is recovered after the Biden-Harris administration made improper payments to multiemployer pension plans."⁸³ The letter also noted that, "as of February 7, 2025, about 30 of these 60 plans have voluntarily repaid nearly $30 million."⁸⁴

PBGC's updated list of plans that have been approved for SFA includes information about plans that repaid SFA, including the amount repaid and date of repayment.⁸⁵ As of April 29, 2026, PBGC data indicated that 67 plans have repaid $261.0 million in overpayments.⁸⁶

This appendix provides background on basic concepts related to the funding of DB pension plans.

Defined Benefit Plan Balance Sheet

Source: Congressional Research Service (CRS).

Defined Benefit Plan Funding Ratio

The funding ratio measures the adequacy of a DB pension plan's ability to pay for promised benefits. The funding ratio is calculated as

A funding ratio of 100% indicates that the DB plan has set aside enough funds, if the invested funds grow at the expected rate of return or better, to pay all of the plan's benefit obligations. Funding ratios that are less than 100% indicate that the DB plan will not be able to meet all of its future benefit obligations. Because benefit obligations are paid out over a period of 20 years to 30 years, participants in an underfunded plan will likely receive their promised benefits in the near term. However, if the underfunding persists without additional contributions, plan participants might not receive 100% of their promised benefits in the future.

In response to strong investment returns in the 1990s, many multiemployer DB pension plans increased benefits to participants. Many of these plans then became underfunded during the early 2000s as financial markets weakened. Their financial position worsened as a result of (1) stricter funding rules put in place in the Pension Protection Act of 2006 (P.L. 109-280), (2) the decline in equity markets in 2008, (3) low interest rates as a result of weak economic conditions, and (4) the bankruptcy of some of the firms participating in the plans.

The Value of Plan Assets

Plan Liabilities

A pension plan's benefits are a plan liability spread out over many years in the future. These future benefits are calculated and reported as current dollar values (also called present value). Figure A-2 shows the process by which future benefits are discounted. Using a formula, benefits that are expected to be paid in a particular year in the future are calculated so they can be expressed as a current value. The process is called discounting, and it is the reverse of the process of compounding, which projects how much a dollar amount will be worth at a point in the future.

Figure A-2. How Future Pension Benefits Are Discounted

Source: CRS.

Source: CRS.

Figure A-3. Present Value Formula

Source: CRS.

Source: CRS.

Discount Rate Used to Value Future Benefits

In the context of DB pension plans, plan actuaries calculate the present value of future benefit obligations by estimating (1) the dollar amount of the benefits accrued by plan participants and (2) the years in the future in which the benefits are expected to be paid. The Internal Revenue Code does not require multiemployer pension plans to use a specific discount rate to value their future benefit obligations. The assumptions a plan uses must be reasonable and offer the best estimate of the plan's expected experience.⁶⁵87 In practice, multiemployer plans generally discount plan liabilities using the expected rate of return on the plan's assets. However, multiemployer plans are required to value plan liabilities using rates of returns to bonds, as well. On Schedule MB of Form 5500, multiemployer plans report the present value of future benefits discounted by the expected return on plan assets (listed as the Accrued Liability Under Unit Credit Cost MethodAccrued Liability Under Unit Credit Cost Method) and by long-term bond yields (listed as the Current Liability under the "RPA '94" Information).⁶⁶88 The RPA '94 discount rate is generally lower than a plan's expected return on assets.

Pension policy experts have several viewpoints on the appropriate discount rate that pension plans should use to value plan liabilities.⁶⁷89 Broadly speaking, some actuaries recommend that pension plans discount future benefits using the expected rate of return on plan investments (the current practice for multiemployer DB pension plans). Some financial economists, by contrast, recommend that plans discount the liabilities using a discount rate that reflects the likelihood that the benefit obligation will be paid.

The rationale for the actuaries' approach is as follows: because funds are to be set aside to pay an obligation in the future, the amount that has to be set aside should consider the rate of the return on the investment. For example, given an expected return of 10%, a $100 obligation payable in one year would be valued at $90.91 in today's dollars ($100 ÷ 1.1 = $90.91), and $90.91 could be set aside today to pay the $100 future obligation.

The rationale for the approach favored by financial economists is that pension obligations should be discounted based on the likelihood that they will be received by plan participants. Because participants are very likely to receive most of their pension benefits (for examplee.g., because of vesting provisions in ERISA and PBGC guarantees), their pension benefits should be discounted using a discount rate close to the risk-free rate. Financial economists say that the actuaries' approach may make an inappropriate connection between the value of liabilities and the rate of return on assets. For example, the value of the obligation can be increased or decreased by changing the assumption on the rate of return, which suggests that a pension plan could eliminate some of its underfunding by investing the plan's assets in riskier investments.⁶⁸

90 The approach suggested by some actuaries results in discount rates that are generally higher than the rates that result by using the approach suggested by some financial economists. One effect of this divergence of opinion is that the value of pension plan benefit obligations is higher (and funding ratios are lower) using the approach favored by some financial economists. For example, in March 2012, a Credit Suisse study estimated the underfunding of multiemployer DB pension plans at $101 billion under the actuaries' approach and $428 billion under the financial economists' approach.⁶⁹

Appendix B. Summary of the Provisions in the Multiemployer Pension Reform Act

Increases to PBGC Premiums

Changes to Funding Rules

Assistance for Deeply Troubled Plans