Welcome to the International Foundation’s informational resource on multiemployer plans. The purpose of this page is to describe multiemployer plans and explain their structure and use.
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A multiemployer plan is an employee benefit plan maintained under one or more collective bargaining agreements to which more than one employer contributes. These collective bargaining agreements typically involve one or more local unions that are part of the same national or international labor union and more than one employer. If the multiemployer plan is a "Taft-Hartley" plan, the plan sponsor is a joint board of trustees consisting of equal representation from labor and management; these trustees are responsible for the overall operation and administration of the plan. The board of trustees is generally the “named fiduciary” and allocates or delegates the administrative functions to persons or entities with expertise regarding the particular function. (Note: Some industries, such as the sports industry, have multiemployer plans that are not Taft-Hartley plans. They involve contributions from several employers and one or more collective bargaining agreements, but they do not have trust funds governed by a joint board of labor and management trustees.)
Workers: Multiemployer plans provide benefit security for participants and beneficiaries through pooling of risk and economies of scale for employees in a unionized workforce covered by the plan. They also provide portability of certain benefits and eligibility for those employees who move from employer to employer within the industry covered by the plan. As a result, multiemployer plans often enable eligibility to be transferred from employer to employer or job to job which can avoid interruptions in coverage that would apply without this portability.
Employers: Multiemployer plans also help employers with a union workforce in the affected area and industry by making available coverages on a more economical basis due to a pooling of risk and economies of scale.
Multiemployer plans are often found in industries and geographic areas where several employers are covered by collective bargaining agreements with one or more participating local unions and covered members could work for several of those employers during their career. Examples of these industries include construction, arts and entertainment, retail stores, transportation, service (including lodging and health care workers), mining and communication.
Multiemployer plans offer the same types of employee benefits that individual companies provide for their employees, including:
As of 2005, there were:
Source: Private Pension Plan Bulletin, 2005 data, U.S. Department of Labor, February 2008.
Source: 1998 Form 5500 data as reported in Final Regulations on Collectively Bargained Plans (preamble), U.S. Department of Labor, April 9, 2003, pages 17,476-17,477.
Provision of retiree medical coverage by multiemployer plans is more common than provision of these benefits by individual employers. Ninety-five percent of multiemployer plan respondents to a 2007 survey provided health insurance coverage for retirees.
Source: Retiree Health Care, Survey & Sample Series, International Foundation of Employee Benefit Plans, 2007.
A MEWA is an arrangement to offer or provide medical benefits to employees of two or more employers that is not maintained pursuant to collective bargaining with those employers. Unlike a multiemployer plan, a MEWA does not provide a negotiated obligation to fund coverages as exists under a collective bargaining agreement and a MEWA is not administered by a board of trustees consisting of representatives from the participating employees and employers. As a result of inadequate funding of benefit promises by MEWAs prior to 1983, Congress passed special legislation whereby a MEWA that is not fully insured is subject to state standards designed to better provide funding for benefit promises. Typically, a MEWA will involve employers who are members of a professional, trade or business association that offers as a member service medical coverage to association members. Finally, ERISA compliance requirements can flow through to individual employers of a MEWA; ERISA compliance for multiemployer plans stays at the trust fund level.
No. Multiple employer plans are pension plans maintained by two or more employers for the purpose of pooling plan assets to reduce administrative costs and for advantageous investing. They involve separate accounts for each employer. Because they do not involve a collective bargaining agreement they are not the same as multiemployer plans.
Multiemployer plans are funded primarily by employer contributions, as specified in collective bargaining agreements, and by investment earnings. In situations where employees contribute to the cost of coverage, arrangements are available for pre-tax employee contributions.
Multiemployer plans are authorized and defined by ERISA Section 3(37), 29 U.S.C. §1002(3)(37).
The National Labor Relations Act of 1935 (NLRA), as amended by the Labor-Management Relations Act of 1947 (also known as the Taft-Hartley Act), authorizes employer contributions to multiemployer plans and provides the governance requirements for these plans. The NLRA states that employers cannot give money or anything else of value to employee representatives (individuals or unions). The law, however, permits employers to contribute money into a joint trust if it is established for the sole and exclusive benefit of employees and their dependents.
Multiemployer plans are governed by a board of trustees with equal representation from labor and management; an equal number of employer and employee representatives are appointed as trustees. The trust document states how many trustees will govern the plan and how they are appointed or elected.
Generally, the trust agreement for a multiemployer plan names the joint board of trustees as the named fiduciary which has discretion regarding the operation and administration of the trust. The agreement also authorizes the trustees to delegate certain of those functions to persons or firms with expertise to perform the functions. As fiduciaries of the multiemployer plan, the trustees on the board must act for the sole and exclusive benefit of the participants and beneficiaries when serving in their role as Trustees. An individual who serves as a union trustee or employer trustee is not acting as a fiduciary when acting in his or her union or employer role even if the matter can affect the plan, provided that such individual is not exercising any authority or responsibility as a trustee when serving in the union or employer role.
The trust agreement generally provides how the benefits provided by the multiemployer plan are to be determined. Many multiemployer plan trust agreements give the board of trustees the authority to determine the plan design and level of benefits. Alternatively, the trust agreement may provide that the collective bargaining agreement will describe the plan design and benefits and, in those cases, the board of trustees is given the authority to collect sufficient contributions to fund the benefits.
Yes. Multiemployer defined benefit pension plans are covered under their own termination insurance program with the PBGC.