Pension Benefit Guaranty Corporation…………PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of 44.1 million American workers and retirees in 30,330 private single-employer and multi-employer 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.
All well and good but PBGC is in some trouble. In 2000, it had a surplus of $10 billion. In 2002, it began to go deficit hunting, reaching -$3.6 billion. Its deficit is flying now – -$22.8 billion. If I understand the meaning of this correctly, then if everybody were to retire tomorrow, we’d be $22 billion short. Pensions would come crashing to an end.
Last week, the Senate passed a complex reform bill to shore up PBGC. The chief feature of too many to make sense of is that employers will have to set aside 100% of the amount needed to cover their obligations and will have seven years to reach that goal.
PBGC pays monthly retirement benefits, up to a guaranteed maximum, to about 683,000 retirees in 3,595 pension plans that ended. Including those who have not yet retired and participants in multi-employer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,296,000 people.
The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans ended in 2005, workers who retire at age 65 can receive up to $3,801.14 a month ($45,613.68 a year). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.
You can check to see if you are covered by going HERE, the link to PBGC.