A recent case from the United States Court of Appeals for the Sixth Circuit, Local No. 499, Board of Trustees of Shopmen's Pension Plan v. Art Iron, Inc., et al., 177 F. 4th 923 (6th Cir. 2024), clarifies a significant legal principle that owners of businesses that are obligated to contribute to multiemployer pension plans (MEP) must know when considering withdrawing from an MEP. A business is generally obligated to contribute to an MEP as a result of being a party to a collective bargaining agreement that requires such contributions.
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Background and analysis
The Employee Retirement Income Security Act of 1974 (ERISA), governs aspects of the administration of retirement plans, including MEPs. The Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), which is a part of ERISA, is intended to protect participants in MEPs by requiring employers that withdraw from MEPs to pay their share of "unfunded vested benefits" to the MEP if it is underfunded when the employer withdraws. This is called withdrawal liability.
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