The benefits PBGC pays to beneficiaries of failed multiemployer plans are based on a scale that calculates years of employee service. The payouts are less than they are for single-employer plans.
The maximum annual guarantees for multiemployer plans range from $1,320 for a worker with 10 years of service to $12,870 for a worker with 30 years on the job to $17,160 for an employee with 40 years.
By contrast, the maximum guaranteed benefit for a single-employer plan participant is $60,136 per year.
How the increase is designed is important, as well as the amount, the report says.
“A well designed increase may encourage additional contributions, encourage continued participation in plans, and strengthen the multiemployer system,” said the report. “A poorly designed premium increase may encourage employer withdrawals and accelerate plan insolvency with a resulting cost to plan participants and a need for even larger premiums.”
The PBGC insures 1,400 multiemployer defined benefit union pension plans covering more than 10 million participants. These account for one out of every four private sector workers in defined benefit plans in the nation.
For single employers, the agency covers 22,000 plans with more than 30 million participants.