The Pension Benefit Guaranty Corporation (PBGC) is proposing a rule to facilitate mergers of multiemployer pension plans that will be published in the Federal Register on June 6.
The proposed rule implements changes under the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC has authority to facilitate plan mergers by providing technical assistance, or financial assistance, if necessary, to avoid plan insolvency.
"Plan mergers can make multiemployer pensions more stable and secure," Tom Reeder, director of PBGC, said in a statement. Reeder continued, "PBGC can help save troubled multiemployer plans before they fail. That helps plan participants and reduces the long-term costs of the pension insurance program."
Recommended For You
Mergers can stabilize or increase the base of contributing employers, combine plan assets for more efficient investing and reduce plan administrative costs, according to the agency. In addition, they are a way some plans can use to preserve and protect the benefits earned by workers and retirees.
While most multiemployer plans are not in danger of running out of money, more than 10 percent of all participants in multiemployer plans (more than one million people, said PBGC) are covered by troubled plans that are projected to run out of money.
The agency is directly responsible for paying the benefits of about 1.5 million people in failed pension plans. Its ability to provide financial assistance is restricted by its limited financial resources, and additional resources are necessary to help all plans in need of assistance.
Before it steps in to assist a merger, PBGC said that it must determine several factors: that the merger is necessary to avoid plan insolvency, that the assistance will reduce PBGC's expected long-term loss and that the assistance will not harm PBGC's ability to meet existing obligations.
Before filing a formal request for a pension plan merger — a complex transaction — PBGC said that plan trustees and other stakeholders should reach out to PBGC for guidance. The agency can provide technical assistance and support in working with other government agencies, in addition to offering financial assistance.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
