Alyssa Lane
In the United States, the Pension Benefit Guaranty Corporation (PBGC) insures and guarantees the pensions of private-sector workers. The PBGC is a federal agency that insures private-sector defined-benefit pension plans in the event of bankruptcy. It does not, however, insure federal, state, or local government pensions. In the UK, the State Pension is a regular payment from the government that most people can claim when they reach State Pension age. The State Pension age depends on when the recipient was born, and the amount they receive depends on how many qualifying years of National Insurance payments they have made.
| Characteristics | Values |
|---|---|
| Name | Pension Benefit Guaranty Corporation (PBGC) |
| Type of Organization | U.S. Government Agency |
| Type of Pension Plans | Single-employer and multiemployer pension plans |
| Protection | Retirement security of about 31 million Americans |
| Website | PBGC.gov |
| Contact | 1-800-400-7242 |
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What You'll Learn
- The Pension Benefit Guaranty Corporation (PBGC) insures defined-benefit pensions of working Americans
- PBGC insures over 31 million Americans and over 24,300 pension plans
- PBGC does not insure federal, state, and local government pensions
- PBGC does not insure pensions associated with religious institutions
- President Biden appointed Davey Grubbs to the Advisory Committee of the PBGC
The Pension Benefit Guaranty Corporation (PBGC) insures defined-benefit pensions of working Americans
The Pension Benefit Guaranty Corporation (PBGC) is a federal agency that insures defined-benefit pensions of working Americans. It was created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private defined-benefit plans. These plans typically pay a set monthly amount at retirement.
The PBGC protects the retirement security of about 31 million Americans in single-employer and multiemployer pension plans. It offers a range of choices for those receiving annuities, and beneficiaries will be informed of the amount they can receive under each annuity choice at the time of retirement. If the beneficiary is married, their spouse may need to provide consent to elect certain forms of benefit.
The PBGC only withholds federal income taxes and certain court-ordered deductions. Beneficiaries are responsible for paying any additional deductions, such as state taxes or health insurance, separately. If a beneficiary has questions about their benefits under a pension plan that is still in operation, they should contact their employer.
The PBGC also provides information and support for employers or practitioners responsible for administering a pension plan. In the event of a plan termination, the PBGC will notify the plan administrator and publish a notice in local and national newspapers, as well as on its website and social media channels. Once the PBGC takes over a plan, beneficiaries will be notified.
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PBGC insures over 31 million Americans and over 24,300 pension plans
The Pension Benefit Guaranty Corporation (PBGC) is a federal agency that insures the defined-benefit pensions of working Americans. It was created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private defined-benefit plans, which typically pay a set monthly amount at retirement.
The PBGC insures over 31 million Americans and over 24,300 pension plans. It covers both single-employer and multiemployer plans in the private sector. This includes pension plans from private-sector jobs, but not federal, state, or local/municipal government pensions, or defined-contribution plans such as 401(k)s.
The PBGC offers a range of choices for annuity payments. If you are already receiving a pension, the PBGC will continue paying without interruption during their review. These payments are an estimate of the benefits that can be paid under the insurance program and are generally the same type of annuity that was being received from the original plan. If you are yet to retire, the PBGC will pay an estimated benefit when you become eligible.
The PBGC steps in when a pension plan is not able to fulfill its obligations. It will then cover pension benefits at normal retirement age, most early retirement benefits, annuities for survivors of plan participants, and disability payments for those receiving them before the covered plan was terminated. It is funded by premiums collected from defined-benefit plan sponsors, assets from defined-benefit plans for which it serves as a trustee, recoveries in bankruptcy from former plan sponsors, and earnings from its invested assets.
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![Pension coverage and vesting among private wage and salary workers, 1979 : preliminary estimates from the 1979 survey of pension plan coverage / Gayle Thompson Rogers. 1980 [Leather Bound]](https://m.media-amazon.com/images/I/61IX47b4r9L._AC_UY218_.jpg)
PBGC does not insure federal, state, and local government pensions
In the United States, the Pension Benefit Guaranty Corporation (PBGC) is a federal agency that was created by the Employee Retirement Income Security Act of 1974 (ERISA). The PBGC insures the defined-benefit pensions of about 31 million working Americans, specifically those in single-employer and multiemployer private-sector pension plans. These plans typically pay a set monthly amount at retirement.
However, it is important to note that the PBGC does not insure all pension plans. Congress has defined certain exceptions, including federal, state, and local/municipal government pensions. This means that if you are a government employee, your pension is not covered by the PBGC. Instead, as a federal civilian employee, your retirement coverage would be provided by the Federal Employees Retirement System (FERS). FERS offers benefits from three sources: a Basic Benefit Plan, Social Security, and the Thrift Savings Plan (TSP). If you leave your government job before retirement, you can take the Social Security and TSP portions of FERS with you to your next job.
In addition to federal, state, and local government pensions, the PBGC also does not insure pensions associated with religious institutions (including hospitals and schools with religious affiliations) and pensions for small professional practices (such as doctors or lawyers with fewer than 25 employees).
If you are unsure whether your pension plan is insured by the PBGC, you can ask your employer or plan administrator for a copy of the "Summary Plan Description" (SPD). The SPD will state whether your plan is covered by the PBGC program. You can also check the PBGC website to search for insured pension plans and find more information about their insurance programs.
In the United Kingdom, pension insurance is not referred to as PBGC. Instead, individuals can receive a State Pension from the government, which is based on how many 'qualifying' years of National Insurance payments they have made. This includes National Insurance contributions while working and credits made when unable to work. The amount of State Pension received depends on the number of qualifying years, with at least 10 qualifying years needed to receive any payment.
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PBGC does not insure pensions associated with religious institutions
The Pension Benefit Guaranty Corporation (PBGC) is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in both single-employer and multi-employer private sector pension plans. It is committed to protecting the pension benefits of about 31 million workers, retirees, and their families.
While the PBGC insures most private-sector pension plans, there are exceptions defined by Congress that the PBGC does not insure. One of these exceptions is pensions associated with religious institutions, including hospitals and schools with religious affiliations. This means that if you are a beneficiary of a pension plan associated with a religious institution, the PBGC will not provide insurance coverage for your pension benefits.
The reason for this exclusion lies in the nature of religious institutions and their pension plans. Religious institutions often have unique structures and funding sources that may be distinct from typical private-sector organizations. Additionally, their pension plans may be structured differently, with benefits determined by factors other than solely financial contributions.
It's important to note that the exclusion of religious institution pensions from PBGC insurance does not mean that these pensions are inherently risky or unstable. Religious institutions typically have their own mechanisms and resources for managing and safeguarding their pension plans. However, it does mean that the federal safety net provided by the PBGC is not available for these specific pensions.
If you are a participant in a pension plan associated with a religious institution, it is advisable to understand the specific details and protections of your plan. It is essential to review the plan's funding status, stability, and any guarantees provided by the religious institution. By being informed, you can make prudent decisions regarding your retirement planning and ensure that your pension benefits are secure.
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President Biden appointed Davey Grubbs to the Advisory Committee of the PBGC
In the United States, the Pension Benefit Guaranty Corporation (PBGC) is a federal agency that insures certain defined-benefit pension plans offered by private-sector employers. The PBGC protects single-employer pension plans and multi-employer pension plans in separate insurance programs.
President Biden recently appointed Davey Grubbs of North Carolina as a new member to serve on the Advisory Committee of the PBGC. The Advisory Committee is a seven-member committee appointed by the President of the United States to represent the interests of labor, employers, and the general public. Grubbs will serve as a member representing the interests of the general public.
Grubbs is a retired truck driver with over 30 years of experience. He became a leader among Teamster retirees, advocating for solutions to the multi-employer pension crisis before the enactment of the Special Financial Assistance (SFA) Program as part of the American Rescue Plan Act of 2021. Grubbs currently serves as vice president of the National United Committee to Protect Pensions (NUCPP) and as director of the North Carolina Committee to Protect Pensions.
As a member of the PBGC Advisory Committee, Grubbs will offer his counsel on investment policy and other matters related to the agency's mission. "Davey will contribute his expertise, perspective, and experience to our Advisory Committee," said PBGC Acting Director Ann Y. Orr. "We look forward to working with him."
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Frequently asked questions
The US government pension insurance is called the Pension Benefit Guaranty Corporation (PBGC). It was set up by Congress to insure the defined-benefit pensions of working Americans.
The PBGC insures and guarantees the pensions of private-sector workers. It covers over 31 million Americans and insures more than 24,300 pension plans.
A pension is a fund into which amounts are paid regularly during an individual's working career, and from which periodic payments are made to support the person's retirement from work.
