Multiemployer Pension Plan

A multiemployer pension plan is a retirement plan created through an agreement between two or more employers and a union. The employers are usually in the same or related industries, such as construction or transportation.

These plans are often called Taft-Hartley plans. Their main advantage is portability: a worker keeps earning one pension while moving between contributing employers.

How Does a Multiemployer Pension Plan Work?

The contribution rate is set through collective bargaining, usually as a dollar amount per hour worked. Each employer reports covered hours and sends contributions to the plan's trust.

A board of trustees runs the plan, with an equal number of employer and union trustees. The plan must meet ERISA standards for funding, vesting, and fiduciary conduct.

The employer's job is to contribute and report accurately. The trustees, not the employer, decide benefit levels and manage the investments.

How Is a Multiemployer Plan Different From a Single-Employer Plan?

The federal backstop differs sharply. The Pension Benefit Guaranty Corporation summarizes its multiemployer maximum as $12,870 per year with 30 years of service.

Employers that sponsor their own arrangements, such as 401(a) pension plans, control plan design. Contributing employers in a multiemployer plan do not.

What Is Withdrawal Liability?

Withdrawal liability is the exit cost of leaving an underfunded plan. If the plan has unfunded vested benefits allocable to the employer, the plan assesses and collects that amount.

A complete withdrawal occurs when the employer permanently stops contributing or ends covered operations. A partial withdrawal can be triggered by a 70 percent decline in the employer's contribution base.

Special rules apply to the construction industry. Any plan to close a division, sell a business, or end a union agreement should include a liability estimate first.

What Should HR and Payroll Teams Know About Multiemployer Plans?

These plans are widespread. A 2026 Congressional Research Service report counts 11.1 million workers in 1,305 multiemployer plans insured by the federal program.

Contributions are driven by hours, so hours records must be exact. HR Cloud's time tracking software captures time by project, and payroll integrations carry it to the system that produces fund reports.

Plans audit contributing employers, and reporting errors compound over years. Our construction payroll compliance guide explains how union fund reporting fits with the rest of payroll.

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Frequently Asked Questions

Q: What is a multiemployer pension plan?

A: It is a pension plan set up by a union and two or more employers, usually in one industry, and funded by employer contributions negotiated in labor agreements.

Q: Is a multiemployer plan the same as a Taft-Hartley plan?

A: Yes, in common usage. Both names describe a collectively bargained plan run by a joint board of employer and union trustees.

Q: Who manages a multiemployer pension plan?

A: A board of trustees with equal employer and union representation. The board hires administrators, actuaries, and investment managers.

Q: What is withdrawal liability?

A: It is the amount an employer owes when it leaves a multiemployer plan that has unfunded vested benefits. The plan calculates and bills it.

Q: Are multiemployer pensions insured?

A: Yes. The Pension Benefit Guaranty Corporation insures private-sector multiemployer defined benefit plans, though its guarantee is lower than for single-employer plans.

Q: Can a non-union employer contribute to a multiemployer plan?

A: Usually only under an agreement that obligates contributions, such as a collective bargaining or project labor agreement covering the work.