The federal agency that insures pension checks for retirees in union and multi-employer plans has raised the price of that insurance again. For plan years beginning in 2026, the flat-rate premium those plans pay the Pension Benefit Guaranty Corporation rises to $40 per participant, up from $39 the year before, a routine-looking dollar increase that is nonetheless the funding mechanism sitting behind a guarantee now relied on by millions of retirees. The increase is set automatically under federal law, not by a fresh act of Congress, and it lands every plan year without a public vote or a press conference.
How a Yearly Fee, Not Tax Dollars, Funds the Guarantee
PBGC does not run on general federal tax revenue. Its multiemployer insurance program is funded almost entirely by premiums that participating pension plans are required to pay every year, set under Section 4006 of the Employee Retirement Income Security Act and adjusted according to a statutory indexing formula. The per-participant flat-rate premium is the simplest of these charges: a flat dollar amount multiplied by the number of people covered by the plan, due regardless of how well funded or poorly funded that specific plan happens to be.
For plan years beginning in 2026, that rate is $40 per participant, up from $39 in 2025. A multiemployer plan covering 10,000 workers and retirees now owes PBGC $400,000 a year in this premium alone, on top of any other required charges, money that flows into the fund PBGC draws on when a plan fails and retirees need their benefits paid.
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From $9 to $40: A Fund Rebuilt One Premium at a Time
The multiemployer flat-rate premium sat at $9 per participant for years through 2013, a level Congress judged too low once a wave of multiemployer plans, many tied to trucking, mining and construction unions, began sliding toward insolvency. The Multiemployer Pension Reform Act of 2014 pushed the rate to $12 and then, the following year, to $26, and it has climbed nearly every year since: $27 in 2016, $28 in 2017 and 2018, $29 in 2019, on up through $37 in 2024 and $39 in 2025 before this year’s move to $40.
That climb reflects a program that came close to running out of money entirely. PBGC’s multiemployer insurance fund was projected toward insolvency within this decade before Congress authorized a separate rescue, the Special Financial Assistance program, to pay failing plans directly rather than let PBGC’s own guarantee fund absorb the loss. The annual premium is the standing side of that funding picture: emergency assistance covered plans already past the point of no return, while the yearly premium keeps building reserves for whichever plans falter next.
Who Actually Pays the $40
The premium is billed to the pension plan itself, not deducted from an individual retiree’s monthly check. Multiemployer plans are typically funded by contributions employers make under collective bargaining agreements, and it is out of that same pool of employer contributions that trustees pay PBGC’s annual premium bill alongside benefits, investment costs and administrative expenses. A rising premium does not appear as a line item on a retiree’s award letter, but it is one more claim on the same trust fund that is supposed to keep paying that retiree for decades.
That indirect path is part of why the increase draws little public attention even as it compounds year over year. A plan with a shrinking, aging membership, more retirees drawing benefits, fewer active workers contributing, pays the same per-participant rate as a growing plan, meaning the premium can weigh heaviest on exactly the plans PBGC most needs to keep solvent.
Single-Employer Plans Pay Nearly Three Times as Much
The multiemployer rate is only part of PBGC’s premium structure. Single-employer pension plans, typically sponsored by one company rather than a union-management trust, pay a separate and considerably higher flat-rate premium: $111 per participant for 2026, up from $106 in 2025. Single-employer plans also owe a variable-rate premium, capped at $751 per participant, tied to how underfunded that specific plan is, a charge multiemployer plans do not pay at all.
The gap exists because the two programs are financed and structured differently. PBGC runs the single-employer and multiemployer insurance programs as legally separate funds, each with its own premium schedule, benefit guarantee formula and financial history, so a rate increase in one program says nothing about the other program’s finances.
What the Premium Guarantees, and What It Leaves Outside
The guarantee that premium funds is real but bounded. PBGC’s multiemployer program pays a formula-based benefit, capped well below what many retirees were originally promised, when a plan can no longer pay on its own, a backstop for lost pension income rather than a substitute for every cost retirement brings. It says nothing about a retiree’s Medicare premiums, prescription drug costs, heating bill or property tax bill, obligations that sit entirely outside PBGC’s mandate.
PBGC publishes the full premium schedule, including the flat-rate and variable-rate charges for both programs and their year-by-year history back to 2007, on its own site, the same table plan sponsors consult each fall to calculate what they will owe the following year.
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This article was reported and written with the assistance of AI and reviewed before publication.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
