FAQs
Pension Benefit Guaranty Corporation (PBGC)
Q: What is the Pension Benefit Guaranty Corporation?
A: PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of more than 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
Q: What does the PBGC guarantee?
A: PBGC guarantees "basic benefits" earned before your plan’s termination date (or the date your employer’s bankruptcy proceeding began, if applicable), which include:
- Pension benefits at normal retirement age
- Most early retirement benefits
- Annuity benefits for survivors of plan participants
- Disability benefits (see exception below)
PBGC does not guarantee:
- Health and welfare benefits
- Vacation pay
- Severance benefits
- Lump-sum death benefits for a death that occurs after the date the plan ended
- Disability benefits for a disability that occurs after the plan’s termination date (or the date your employer’s bankruptcy proceeding began, if applicable)
Legal Limits on PBGC's guarantees
- Generally, PBGC does not guarantee any monthly pension amount that is greater than the monthly benefit your plan would have provided if you had retired at your normal retirement age.
- The maximum amount that PBGC guarantees is set each year under provisions of ERISA.
- Higher limits may apply for people who met their plan’s requirements for a disability pension (whether they are receiving a disability pension or a non-disability pension) before the plan’s termination date.
- PBGC may not fully guarantee your benefits if your plan was created or amended to increase benefits within five years before its termination date.
- If the plan terminated while your employer was in a bankruptcy proceeding that began on or after September 16, 2006, guarantees are determined as of the date your employer’s bankruptcy proceeding began.
- Additional limits may apply for certain airline industry plans.
Source: www.pbgc.gov
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