"Big problems in many multiemployer plans have been largely overlooked."

– The Wall Street Journal, May 26, 2005

Multiemployer plans are designed to allow workers to move from company to company within a specific industry, while still accruing benefits in the same pension plan. Like single-employer plans, most multi-employer schemes provide defined benefits.

Multiemployer plans are supposed to provide security in fields where workers switch jobs frequently, like construction, trucking, and grocery stores. That security, though, is going up in smoke. Last year, Ohio Senator Mike DeWine told a congressional subcommittee that multi-employer plans were “in trouble” due to “financial uncertainty.”

The Pension Benefit Guarantee Corporation found that multi-employer plans, which cover some 10 million workers in several industries, were underfunded by $150 billion in 2004.  A single plan alone, the Central States Pension Fund, had $30 billion in liabilities at the end of 2003, according to an IRS report.

The PBGC does help bail out insolvent multiemployer plans, just as it does for single-employer plans. In many cases, though, the benefits paid to employees of a bailed-out multi-employer plan will be a whopping two-thirds less than originally promised, The Wall Street Journal recently reported.

Another important problem facing some Multiemployer Plans is the important question of “orphans” – workers in plans where companies have either gone bankrupt or made promises to employees they are in no position to keep.