Welcome to the arcane world of multiemployer defined benefit pension plans. “Multis” are often called Taft-Hartley plans, after senators Robert Taft of Ohio and Fred Hartley of New Jersey, co-sponsors of the 1947 Labor-Management Relations Act. Just don’t call them union plans, or risk rankling labor executives, who are quick to explain that these collectively bargained plans are managed by boards of trustees staffed with equal numbers of union and employer representatives. But keep in mind that a typical ten-member Taft-Hartley pension fund board consists of five trustees who are members of the same union and five trustees who likely represent competing employers in the same industry.

A cluster of confounding pension rules and regulations began seriously gumming up the multiemployer pension works when financial markets took a nosedive in 2008. Increased employer bankruptcies and unemployment were heaped onto already stagnating union membership rolls. But even before the market meltdown, pension law and multiemployer plans had a troubled relationship.

“The complex web of rules that govern multiemployer pensions are part of the problem,” asserts Michael Sullivan, general president of the Sheet Metal Workers International Association in Washington and chairman of the board of the Sheet Metal Workers’ National Pension Fund. “Over the years I’ve seen the goalposts keep moving because we have too many regulatory groups involved — the Department of Labor, the Internal Revenue Service and the [Pension Benefit Guaranty Corp.]” Adds Kenneth Hoffman, an employee benefits specialist attorney at Washington-based law firm Venable, “Multis are so different from single employer, it’s difficult to understand the rules.”

First came the Employee Retirement Income Security Act, better known as ERISA, passed in 1974 to regulate private pension funds, including Taft-Hartleys. A weakness in the law soon became evident when employers who paid into the multi plans on behalf of an often part-time, mobile union workforce ceased contributing to the plans, leaving employees in the lurch.

Multiemployer Pensions Face Uncertain FutureThe Multiemployer Pension Plan Amendment Act of 1980 was passed to force employers in these plans to keep their pension promises. It ensured that if one company went out of business, the remaining employers in the plan would have to pick up the pension contributions for the unemployed workers, or “orphans.” It also required an exiting employer to cover its liabilities before withdrawing from a plan. When all employers but one have either gone bankrupt or bought their way out of a multiemployer fund, that last employer is, in Taft-Hartley parlance, “the last man standing.”