Multiemployer Pension Plan
A multiemployer pension plan is a collectively bargained defined benefit plan maintained by two or more unrelated employers under a single trust, typically in industries with mobile workforces — such as construction, trucking, and entertainment — where workers move among multiple employers over their careers.
Multiemployer plans, sometimes called Taft-Hartley plans, are established through collective bargaining between a union and a group of employers in the same industry. Individual employers contribute a negotiated amount per hour worked into the central trust, and the plan pays defined benefits to retired workers based on years of credited service across all contributing employers. This structure allows workers who frequently change employers within an industry to accumulate retirement benefits portably.
The funding status of multiemployer plans is measured using the zone certification system established by the Pension Protection Act of 2006. Plans in the green zone are adequately funded, plans in the yellow zone (endangered) must adopt improvement plans, and plans in the red zone (critical) must adopt rehabilitation plans that may include benefit cuts and increased contribution requirements.
Withdrawal liability is one of the most significant legal risks associated with multiemployer plans. Under ERISA Section 4201, an employer that withdraws from a multiemployer plan — by ceasing covered operations or permanently stopping contributions — may be assessed a proportional share of the plan's unfunded vested benefits. This liability can be substantial and unpredictable, and it can persist even after a business is sold if the transaction is structured as an asset sale rather than a stock sale, depending on the successor liability rules.
The American Rescue Plan Act of 2021 authorized special financial assistance for critically and deeply troubled multiemployer plans, providing funding sufficient to pay benefits through at least 2051 without benefit cuts. Approximately 200 plans received relief under this program.