Under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), employers are permitted to sponsor two broad categories of pension plans. They are (1) defined benefit plans—in which employers generally maintain a fund to provide a fixed level of monthly retirement income based on a formula specified in the plan—or (2) defined contribution plans—in which retirement income is based on employer and employee contributions and the performance of investments in individual employee accounts.contribution plan. A MEP may be a defined benefit plan or a defined There are three types of pension plans that share some features with MEPs but are not the focus of this report: (1) A single-employer plan is established and maintained by only one employer and for that employer’s employees. (2) A multiemployer plan is another form of multiple employer arrangement where a plan is established and maintained pursuant to the terms of a collective bargaining agreement between at least one employee organization and more than one employer. Specifically, management and labor representatives must jointly govern these plans, in which participants can negotiate the plan benefits through a union. (3) A master or prototype plan is based on a largely uniform plan document sponsored by an organization for adoption by employers who are either its customers or members. An employer who adopts a master or prototype plan completes an adoption agreement to elect certain options specified in detail in a separate plan document, but generally the provider or sponsor centrally administers the plan and, in the case of a master plan, pools the assets of the adopting employers into a central investment trust. Banks, trade or professional organizations, insurance companies, and mutual funds are generally allowed by the IRS to provide master or prototype plans. In addition to employee pension benefit plans, ERISA covers employee welfare benefit plans for health care and other employee benefits as well. MEPs as pension plans have an analogous welfare arrangement called multiple employer welfare arrangements (MEWA). These are also maintained by multiple employers, and depending on the facts and circumstances, are single employer or multiple employer plans subject to requirements under ERISA. Labor, IRS, and PBGC share federal responsibility for regulating pension plans under ERISA. Labor enforces rules concerning how pension plans should operate in the best interest of participants and beneficiaries. Accordingly, Labor has the statutory authority to bring legal action against all fiduciaries under ERISA. Within Labor, the Employee Benefits Security Administration (EBSA) is charged with interpreting and enforcing laws designed to assure the security of the pension, health, and other employment-based benefits of American workers and their families. EBSA issues advisory opinions in which it facilitates compliance with ERISA through interpretative guidance. A plan sponsor may request a determination from EBSA that its arrangement constitutes an employee benefit plan under ERISA. Through its advisory opinions, EBSA provides the position of the department as to the application of one or more sections of ERISA. An advisory opinion, which is limited to the facts in the opinion, can be relied upon, as a legal matter, only by the parties in the opinion. However, these opinions serve as guidance to others on what arrangements are considered employee benefit plans under ERISA. 26 U.S.C. §§ 401(a) and 501(a). terms of the plan as presented to the IRS, conform to the requirements of the IRC. Lastly, PBGC acts as an insurer of private-sector defined benefit pension plans by guaranteeing participant benefits up to certain statutory limits and, in the case of covered single-employer plans, protecting participants when the plan terminates with insufficient assets to pay all benefits, such as the bankruptcy of plan sponsors with underfunded plans. Little is known about the characteristics of private sector MEPs, particularly information about the employers that participate in them. No information with respect to participating employers in MEPs is currently collected in the Form 5500, which is the primary source of pension plan information for government oversight activities. However, basic plan and sponsor-level information on MEPs is available in the Form 5500 data, and we were able to analyze this data. The data show that MEPs are a small portion of the overall pension universe and that the bulk of plan assets and participants reside among the largest 25 defined contribution and defined benefit MEPs. Lastly, we identified a new sponsor type of MEP: the “open” MEP. Unlike the other sponsors we identified, the employers that participate in open MEPs share no common relationship or affiliation with the other employers in the plan. As described previously, a MEP is a type of pension plan maintained by more than one employer. Typically, employers participating in a MEP have a common interest in some business or association, but do not share common ownership control. When employers decide to participate in a MEP, they legally adopt the plan as their own, as do other participating employers. A participating employer may sign an agreement that serves to identify the plan terms that will apply to its employees. Oversight agencies and plan administrators treat individual employers within the MEP as maintaining separate, single-employer plans for some purposes. For example, the IRS tests individual employers in a MEP separately against certain requirements designed to promote equity and inclusiveness of contributions and benefits across employees. Additionally, a MEP may allow each participating employer to specify employer and employee contributions and allow participating employers to maintain unique plan benefit formulas. For other purposes, notably certain reporting and auditing requirements, oversight agencies treat the MEP as one plan. under ERISA must only file a single Form 5500. In addition, a defined benefit MEP pays a single-employer insurance premium to PBGC for the plan as a whole. Generally, ERISA requires pension plans with 100 or more participants to have an audit as part of their obligation to file an annual return/report, known as the Form 5500. 29 U.S.C. §§ 1023(9)(3)(A) and 1024(a)(2)(A). When an audit is required, the plan administrator must select an independent qualified public accountant. A plan audit is one way to help protect the assets and financial integrity of the pension plan and ensure that the necessary funds will be available to pay promised retirement benefits. An audit helps the sponsor carry out legal responsibilities to file a complete and accurate annual return/report for the plan each year. In addition, the audit serves as financial disclosure to the participants and beneficiaries. current data with respect to participating employers in a MEP.Participating employer information for a MEP is important because each employer may be unique in relation to the plan overall, with regard to discretionary plan options or its portion of the overall participants in the MEP. According to the official, the agencies could change the Form 5500 to include participating employer information after the department complies with the legally required steps for implementing regulations, including regulatory analysis and notice-and-comment rulemaking, as well as requirements under the Paperwork Reduction Act of 1995 (Pub. L. No. 104-13, 109 Stat. 163 (codified as amended at 44 U.S.C §§ 3501-3521)) and the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. No. 104-121, tit. II 110 Stat. 847, 857-74. Any added information would require changes to systems administered by Labor’s contractor, with the cost of such a change depending on the format of the change. that having access to participating employer information could have in targeting plans that may have such plan testing issues. Besides participating employer information, Labor officials suggested that information identifying key MEP sponsor types or employer relationships may also be useful. As a possibility for gathering information about MEPs, Labor officials suggested requiring an initial Form 5500 filing immediately upon plan establishment. Another option would be to implement a registration requirement for newly-formed MEPs, though officials stated that Labor has no specific statutory authority to initiate collection of such information. According to some MEP sponsors, reporting basic information about the number of participating employers in a MEP would not be burdensome. However, a few sponsors also told us that, to avoid creating complex and burdensome reporting requirements, agencies would need to carefully consider the information to be collected. For example, dynamic interrelationships among participating employers, such as one employer being a subsidiary of another, would require carefully defining the term “participating employer.” Nevertheless, a plan sponsor representative said participating employer information could be used for measuring a MEP’s cost-effectiveness. The 2009 plan and sponsor-level Form 5500 data, the most current and complete year of data at the time of our analysis, show that MEPs comprise a relatively small portion of the universe of pension plans. Defined benefit and defined contribution MEPs each represent only 0.7 percent of approximately 46,000 private sector defined benefit plans and approximately 654,000 private sector defined contribution plans. The vast majority of pension plans are single-employer plans. More specifically, MEPs account for only 318 defined benefit plans and 4,593 defined contribution plans. MEP sponsorship seems to be following the general trend away from traditional defined benefit plans and towards defined contribution plans. For example, from 2001 to 2009 the number of defined contribution MEPs appears to have grown by 20 percent, while the number of defined benefit MEPs shrank by over a third. (See fig. 1). While MEPs represent a relatively small percentage of pension plans, based on available data, they appear to represent a somewhat larger percentage of pension assets. For example, defined benefit MEPs represented about $110 billion in plan assets as of 2009—about 6 percent of all defined benefit assets. Defined contribution MEPs represented an estimated $175 billion in assets—also about 6 percent of all defined contribution assets. The portion of all participants represented by MEPs is generally similar to the proportion of all assets represented by MEPs. In 2009, defined benefit MEPs included about 2.2 million participants—about 5 percent of all defined benefit plan participants.