Multiemployer Plans – A Proposal to Spread the Pain

IB#14-17

The brief’s key findings are:

  • A small, but significant, number of multiemployer pension plans face insolvency in the next 20 years – despite actions to reduce benefits and raise contributions.
  • To avoid insolvency, a Commission with representatives from plans, employers, and unions has proposed allowing plans to cut accrued benefits of current workers and retirees.
  • Critics are concerned that such a tool is unnecessary and would unfairly hurt plan participants, particularly retirees.
  • Our analysis of one large plan suggests that the proposal would improve overall participant welfare, but leave the plan operating largely on a pay-as-you-go basis.
  • Thus, before approving the use of such a tool, regulators should have access to detailed plan data to ensure not only solvency, but also a reasonable level of funding.