Practice Areas

Outlook is Bleak for Multi-Employer Pension Funds

February 2011

By: Richard H. Wessels, Esq.

A perfect storm has hit multi-employer pension funds. This combination of a workforce downturn in many unionized sectors (particularly construction), poor investment results and tougher funding requirements mandated by federal laws, has created historic levels of underfunding. Two federal laws - the 2006 Pension Protection Act and the 1980 Multi-Employer Pension Protection Act - have created substantial liability in many funds. The most common liability for employers is an increased contribution requirement (surcharges) or unfunded withdrawal liability (for example, a big bill after a union is ousted or a business is shut down). Unexpected bills from a fund can be catastrophic. If you are contributing to a union pension plan, you need to be alert to these issues. Play close attention to critical status notices you might receive from a fund. The Department of Labor has a list of multi-employer plans in critical and endangered status. "Critical" status is the most serious, often referred to as "red zone." You can access this list of both critical and endangered funds at www.dol.gov/ebsa/criticalstatusnotices.html.

Some of the union plans in the Upper Midwest on the "red zone" list are:

  • Central States Southeast and Southwest Areas Pension Fund (Teamsters)
  • Laborers National (Industrial) Pension Fund
  • PACE Industry Union-Management Pension Fund
  • SEIU National Industry Pension Fund
  • Sheet Metal Workers National Pension Fund
  • Stagehands Local Two Retirement Plan
  • Suburban Teamsters of Northern Illinois Pension Fund
  • UNITE HERE National Retirement Fund
  • United Food and Commercial Workers Unions and Employers Pension Fund
  • United Furniture Workers Employees Pension Fund

Another method to get information is to request from the plan administrator an estimate of withdrawal liability. If you are contributing to a multi employer plan and want to talk it over, contact Dick Wessels at 630-377-1554.