Cowden: Multiemployer Plans Pose Hidden Dangers for Employers
Many of today's benefit plans are in questionable financial condition, constituting a real danger not only to employers but also to employees. Per
Multiemployer pension plans, found primarily in the construction, entertainment, manufacturing, retail food and transportation industries, are insured by the
Nonetheless, Dinkin notes that a multiemployer plan can be essential to employers subject to a collective bargaining agreement. Given the variances in these plans, it's important for these employers to be aware of the more common liabilities that can be asserted by such a plan:
- Fiduciary liability for unpaid contributions. Fringe benefit plan trust agreements ("fringe" meaning, in this context, essentially anything beyond a pension) often state that contributions required under a collective bargaining agreement become plan assets when due. Some plans also make the employer's officers and directors personally liable as fiduciaries for unpaid contributions.
- Funded status surcharge. If a multiemployer pension plan is in critical financial status, the Trust can assess a surcharge in addition to the regular contribution for a participating employer.
- Other expenses. The ability to collect unpaid contributions by the Trusts may create a contingent liability if assessed by the Courts and may include liquidated damages and attorneys' fees.3
Dinkin points out that altogether, a great deal of advanced planning is needed for current employers and those who are considering entering into multiemployer plans. Trustees must ensure that multiemployer retirement plans operate smoothly in today's market conditions. Health and welfare plans need to be developed with an eye to funding methods, plan design, market competitiveness, costs and cost drivers. Success for all parties," says Dinkin, "depends on striking a balance between strong, well-funded benefits and a competitive wage package. We focus on helping Trustees and participating employers to better understand the stress points of the various benefit programs in order to prioritize the appropriate funding to solutions that provide the greatest benefit both to the members and the employers."
About
1. PBGC, "Maximum Monthly Guarantee Tables,"
2. Topoleski, John J., "Data on Multiemployer Defined Benefit Pension Plans,"
3. Schreier,
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