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BREADCRUMB

 1. Home
 2. About PBGC
 3. Frequently Asked Questions
 4. General FAQs About PBGC





GENERAL FAQS ABOUT PBGC

Expand All Answers Collapse All Answers


WHAT IS THE PENSION BENEFIT GUARANTY CORPORATION (PBGC)?

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
multiemployer private sector pension plans - the kind that typically pay a set
monthly amount at retirement. If your plan ends (this is called "plan
termination") without sufficient money to pay all benefits, PBGC's insurance
programs will pay for the benefit provided by your pension plan, up to the
limits set by law. 

The agency’s two insurance programs are legally separate and operationally and
financially independent. The Single-Employer Insurance Program is financed by
insurance premiums, investment income, and assets and recoveries from failed
single-employer plans. The Multiemployer Insurance Program is financed by
insurance premiums. Special financial assistance for financially troubled
multiemployer plans is financed by general taxpayer money.


WHAT CAN PBGC TELL ME ABOUT MY PENSION?

If you're a participant in a pension plan that PBGC insures but that has not yet
been taken over ("trusteed"), PBGC generally will have no information
specifically about you, your plan, or your benefits under that plan. Your
information and your pension benefit remain with the employer that promised you
a pension. PBGC gathers this information only after PBGC trustees the plan. This
means you'll find only general information below about our insurance programs
and how they operate, including our guarantees. If PBGC has trusteed your
pension plan, we'll have only limited information about your plan and your
benefits until we've had time to obtain and review your plan's records -
typically after several months.


WHEN COMPANIES REORGANIZE: BANKRUPTCY


IF MY PLAN SPONSOR FILES FOR BANKRUPTCY, DOES THAT NECESSARILY MEAN THAT MY
PENSION PLAN WILL END (TERMINATE)?

No. Plan termination is a separate event from filing for bankruptcy. If your
plan sponsor (usually your employer) has filed for bankruptcy, that does not
necessarily mean your pension plan has been or will be terminated. Many plan
sponsors emerge from bankruptcy without terminating their plans. However, if
your plan has not terminated and you have questions about whether your plan
could terminate, contact your plan administrator.


ARE THERE ANY SPECIAL RULES IF MY PLAN ENDS IN BANKRUPTCY?

If your plan entered bankruptcy on or after September 16, 2006, the following
rule applies:

If your plan sponsor (usually your employer) files a petition for bankruptcy
protection before your plan ends, and is still in bankruptcy when the plan ends,
PBGC uses the bankruptcy filing date instead of the termination date for your
plan to determine the guaranteed pension benefit amount.

You can find more information about the bankruptcy date rule here.


DO THE BANKRUPTCY DATE RULES DEPEND ON WHETHER MY PLAN ENDS IN CHAPTER 11 OR
CHAPTER 7 BANKRUPTCY?

No. The rules are the same regardless of type of bankruptcy, but they generally
apply only if your plan has not emerged from bankruptcy before the date your
plan ends.


WHERE ELSE CAN I FIND GENERAL INFORMATION ON BANKRUPTCY?

The Department of Labor(link is external) has a Web page describing the effects
of bankruptcy on your employee benefits.


WHEN PENSION PLANS END: TERMINATION


HOW CAN AN EMPLOYER TERMINATE A PENSION PLAN?

There are two ways an employer can terminate its pension plan.

Standard Termination

The employer can end the plan in a standard termination but only after showing
PBGC that the plan has enough money to pay all benefits owed to participants.
Your plan must either:

 * purchase an annuity from an insurance company (which will provide you with
   lifetime benefits when you retire) or,
 * if your plan allows, issue a lump-sum payment that covers your entire
   benefit. Before purchasing your annuity, your plan administrator must give
   you an advance notice that identifies the insurance company (or companies)
   that your employer may select to provide the annuity. PBGC's guarantee ends
   when your employer purchases your annuity or gives you the lump-sum payment.

Distress Termination

If the plan does not have enough money to pay all pension benefits owed to
participants and the employer is in finanacial distress, the employer may apply
for a distress termination. PBGC cannot grant the application, however, unless
the employer proves to us or to a bankruptcy court that the employer cannot
remain in business unless the plan is terminated. If the application is granted,
we normally will take over as trustee of the plan and pay plan benefits, up to
the legal limits.


WHEN DOES PBGC TERMINATE A PENSION PLAN?

Under the law PBGC may take action on its own to end a pension plan if
termination is needed to protect the interests of plan participants or of the
PBGC insurance program. For example, PBGC will end a plan if it will be unable
to pay benefits when due.


HOW CAN I FIND OUT IF MY PENSION PLAN IS UNDERFUNDED?

Your plan administrator must give you an annual written notice about the funded
status of the plan. You also have a legal right to obtain information about your
plan's funding by requesting the information in writing from your plan
administrator.


HOW WILL I KNOW IF MY PENSION PLAN IS ENDING?

If your employer wants to end the plan, your plan administrator must notify you
of this in writing. You must get this notice, called the "Notice of Intent to
Terminate," at least 60 days before the proposed termination date. If PBGC is
terminating the plan, we notify the plan administrator and often publish a
notice about our action in local and national newspapers.


WHAT OTHER INFORMATION SHOULD I RECEIVE?

In a standard termination, you should receive a second letter describing the
benefits you will receive, called the "Notice of Plan Benefits," generally no
later than six months after the date proposed for your plan's termination.

In a distress termination or a termination initiated by PBGC, our communication
with you begins when we take over as trustee of your plan. Initially we will
give you general information about the pension insurance program and our
guarantees. We will be able to provide more specific information about your
benefits after we have had an opportunity to review the plan's records, assets,
benefit liabilities, and your participation in the plan.


HOW TO KNOW IF YOUR PENSION PLAN IS COVERED


WHAT TYPES OF PLANS DOES PBGC INSURE?

PBGC insures defined benefit plans offered by private-sector employers. Most
promise to pay a specified benefit, usually a monthly amount, at retirement.
Others, including cash-balance plans, may state the promised benefit as a single
value.  PBGC does not insure defined contribution plans, which are retirement
plans that do not promise specific benefit amounts, such as profit-sharing or
401(k) plans.

These FAQs cover only single-employer plans, which are normally sponsored by an
individual company for the benefit of its workers. Another PBGC program insures
multiemployer plans covering unionized workers of non-related employers in the
same industry, such as trucking or construction.


HOW CAN I FIND OUT IF MY PENSION PLAN IS INSURED BY PBGC?

The easiest way is to ask your employer or plan administrator for a copy of the
"Summary Plan Description," or SPD. The SPD will state whether your plan is
covered by the PBGC program. Although we insure most defined benefit plans, some
are not covered.

PBGC usually does not insure plans offered by:

 * professional service employers (such as doctors and lawyers) that have never
   had more than 25 active participants since the enactment date of ERISA, the
   federal pension law,
 * church groups, or
 * federal, state, or local governments.

Please see also Finding Your Insured Pension Plan and Insured Single-Employer
Plans FAQs.


WHAT TERMINATION MEANS TO YOU: YOUR PENSION BENEFITS


CAN I EARN ADDITIONAL BENEFITS AFTER MY PLAN'S TERMINATION DATE?

No. You cannot earn additional benefits under your plan after it terminates.


WHAT HAPPENS WHEN PBGC TAKES OVER AS TRUSTEE OF MY PLAN?

PBGC reviews your plan's records to determine the benefits each person will
receive. The amount we pay is subject to limits set by law.

If you are already receiving a pension, we will continue paying you without
interruption during our review. These payments are an estimate of the benefits
that PBGC can pay under the insurance program. We will pay these benefits in the
annuity form you chose at retirement, but they may be less than you were
receiving from your plan.

If you have not yet retired, we will pay you an estimated benefit when you
become eligible and apply to PBGC to begin payments. About four months before
you are ready for your benefits to begin, contact PBGC by calling the Customer
Contact Center toll-free at 1-800-400-7242.

We deposit most benefits into participants' accounts electronically, the safest,
most secure, and simplest method. If you do not want to use direct deposit, you
may still receive your benefit by check.


WHEN DOES PBGC MAKE ITS DETERMINATION OF MY BENEFIT?

After we have completed our review of all plan data and records, we will notify
you in writing of your PBGC benefit and your right to appeal our determination.
If you are receiving an estimated benefit, the letter will inform you whether
your future payments will change and, if so, how much higher or lower they will
be than the amount you are currently receiving.


WHAT HAPPENS IF MY ESTIMATED BENEFIT IS TOO HIGH OR TOO LOW?

If your estimated benefits have been lower than the amount that PBGC ultimately
determines you should be receiving, PBGC will make up the difference in a single
payment with interest when we have completed our review of your plan.

If your estimated benefits have been higher than the amount you should be
receiving, we will correct your future monthly payments to the final amount as
calculated by PBGC. Typically, payments will be further reduced by no more than
10 percent each month to account for the higher payments already received.


WHAT BENEFITS DOES PBGC GUARANTEE?

PBGC guarantees "basic pension benefits," subject to legal limits. These
include:

 * pension benefits at normal retirement age,
 * most early retirement benefits,
 * disability benefits, and
 * annuity benefits for survivors of plan participants.

The guarantee applies only to benefits earned before the plan terminates;
however, if the plan terminates while your employer is in bankruptcy, the
guarantee may be limited to benefits earned before the bankruptcy. Additional
limitations may apply to certain airline industry plans.

The pension benefit PBGC pays depends on

 * provisions of your plan,
 * legal limits,
 * the form of your benefit,
 * your age,
 * plan assets, and
 * amounts (if any) PBGC recovers from employers for plan underfunding.

We do not guarantee health and welfare benefits, severance and vacation pay,
life insurance, lump-sum death benefits, certain other death benefits, and other
non-pension benefits. PBGC benefits are not increased for cost-of-living
adjustments (COLAs).

For more information see, what PBGC guarantees and our maximum guarantee tables.


WHAT IS THE MAXIMUM AMOUNT THAT PBGC CAN GUARANTEE BY LAW?

PBGC's maximum benefit guarantee is set each year under provisions of ERISA. The
maximum guarantee applicable to a plan is fixed as of that plan's termination
date except for cases where termination occurs during a plan sponsor's
bankruptcy, in which case the maximum guarantee may be fixed as of the date the
sponsor entered bankruptcy. An earlier date also may apply to certain airline
industry plans.

The maximum guarantee is lower if you begin receiving payments from PBGC before
age 65 or if your pension includes benefits for a surviving spouse or other
beneficiary. The maximum guarantee is higher if you are over age 65 when you
begin receiving benefits from PBGC.

 

Click the link below to see a table of the maximum amounts that PBGC can
guarantee for a straight-life annuity with no survivor benefits and a
joint-and-50%-survivor annuity for ages 45-65. The maximum is based on your age
at the date you begin receiving benefits from PBGC.

 

For disability benefits, see Guaranteed Benefits. Other guarantee limitations
that may apply are described in the questions and answers that follow.

 

Maximum monthly guarantee tables


I AM 65 YEARS AND SIX MONTHS OLD. WILL PBGC TREAT ME AS 65 YEARS OLD OR 66 YEARS
OLD?

PBGC uses your age in years and months to determine benefits, even though we
list ages at one-year increments on the maximum monthly guarantee tables.


IS THE MAXIMUM BENEFIT GUARANTEE ALSO THE MAXIMUM BENEFIT AMOUNT PBGC WILL EVER
PAY?

PBGC allocates plan assets according to priority categories set down in the law,
regardless of the funding level of the plan. As a result, benefits above the
guaranteed level may sometimes be paid. Click here to learn more about
the priority categories.


ARE THERE OTHER LIMITS ON PBGC'S GUARANTEE?

Yes.

 * If your plan was created or amended to increase benefits within five years
   before the plan's termination date, your benefit may not be fully guaranteed.
   PBGC guarantees the larger of 20% of the benefit increase or $20 per month
   for each full year the benefit increase was in effect. If you own more than
   50% of the business, stricter limits apply.
 * If you become eligible for additional benefits as a result of an event such
   as the shutdown of a facility that occurs after July 26, 2005, and less than
   five years before your plan's termination date, the increase is not fully
   guaranteed.
 * Additional limits may apply if the plan terminated while your employer was in
   a bankruptcy proceeding and for certain airline industry plans.
 * Also, if your plan provides supplemental benefits, such as temporary
   payments, they may not be fully guaranteed. 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.

Special rules may apply if you are disabled.


MY PENSION PLAN FEATURES A TEMPORARY SUPPLEMENT TO "BRIDGE" THE DIFFERENCE
BETWEEN MY ACTUAL RETIREMENT AGE AND THE SOCIAL SECURITY RETIREMENT AGE. HOW DO
I FIGURE OUT WHETHER THIS SUPPLEMENT IS GUARANTEED?

Let's say your monthly benefit would have been $1,000 at age 65, but you retired
at age 60 with $900 per month as your early retirement benefit plus $600 per
month as a temporary supplement payable until age 62. Your total benefit, $1,500
per month, is larger than the $1,000 benefit you would have received if you had
retired at your normal retirement age. PBGC can pay you only $1000 per month
($900 per month early retirement benefit plus $100 supplement) until age 62 and
$900 per month after age 62. Other limitations may reduce your benefit, or the
allocation of the assets of the plan may increase it.


I BECAME ELIGIBLE FOR ADDITIONAL BENEFITS WHEN THE FACILITY WHERE I WORKED WAS
SHUT DOWN. NOW, MY PLAN IS TERMINATING. ARE THE ADDITIONAL BENEFITS GUARANTEED?

If an event such as a shutdown or lay-off occurred after July 26, 2005, and less
than five years before your plan's termination date (or the date that the plan
sponsor's bankruptcy proceeding began), the additional benefits may not be fully
guaranteed. The phase-in rule described above would treat the additional
benefits as if they were first adopted by the plan on the shutdown date.


DOES PBGC PAY SURVIVOR BENEFITS?

Yes. PBGC will pay benefits to your surviving beneficiary if you elected a
benefit form that provides survivor benefits, whether you retired before or
after your plan terminated.

 * If you chose a benefit form that provides survivor benefits for the life of
   your beneficiary (such as a joint-and-survivor annuity) we will pay these
   benefits only to the beneficiary you chose when you retired. In such a case,
   if you remarry after you retire, your new spouse usually will not be entitled
   to a survivor benefit.
 * If you chose an annuity that pays your beneficiary only for a fixed period of
   time (such as a certain-and-continuous annuity), upon your death we will pay
   any remaining benefits to your most recently named beneficiary.

A Qualified Domestic Relations Order (QDRO) also may affect benefit payments.

 

PBGC allows all future retirees, whether married or not, to elect a benefit form
that provides survivor benefits and to name a beneficiary at that time.

 

If you are married and die before retiring, we pay your surviving spouse a
survivor benefit. Your spouse can begin this benefit as early as the date your
plan permits you to retire, but typically no earlier than your 55th birthday.

 

If you are entitled to or are receiving a survivor benefit when your plan
terminates, PBGC will pay or continue to pay your survivor benefit for the
period provided by your plan.


WHAT IS A PBGC CUSTOMER IDENTIFICATION NUMBER?

Identity theft is a growing problem, and PBGC wants to help protect you. That’s
why we are phasing out use of Social Security numbers when we communicate with
our customers. Instead, each participant in a PBGC-trusteed pension plan will
receive a unique customer identification number. This ID will keep your
confidential information safe when you do business with PBGC.

Get your PBGC customer ID by calling us toll-free at 1-800-400-7242. Visit our
Contact Us page for hours and more information.


WHAT SPECIAL PBGC GUARANTEE RULES APPLY TO THE BENEFITS OF DISABLED
PARTICIPANTS?

See Guaranteed Benefits.


DETAILS YOU SHOULD KNOW ABOUT BENEFIT PAYMENTS


WILL PBGC ADJUST MY PENSION YEARLY FOR INFLATION?

No, there is no cost-of-living adjustment under the law.


CAN I RECEIVE MY BENEFIT FROM PBGC IN A LUMP SUM?

Normally, we pay benefits in monthly payments for life rather than as a lump
sum. However, if the total value of your benefit is $5,000 or less, you may be
able to receive it in a single payment.


CAN I PUT MY LUMP SUM INTO AN INDIVIDUAL RETIREMENT ARRANGEMENT (IRA)?

Yes, most traditional IRAs or other qualified retirement plans will accept your
lump-sum payment from PBGC. If you have PBGC pay the lump sum directly to your
IRA or other plan, PBGC will not withhold tax from the payment. With this type
of payment, called a "tax-free rollover," you will not have to pay tax until you
receive payments from the IRA or other plan. You can get more information about
tax-free rollovers by contacting your local Internal Revenue Service office,
calling 1-800-TAX-FORM, or visiting www.irs.gov(link is external).


CAN I CHOOSE THE FORM OF MY ANNUITY BENEFIT FROM PBGC?

Yes, PBGC generally offers you a range of choices if your annuity begins after
PBGC trustees your plan. The choices are explained on the Web page Your PBGC
Benefit Options. At the time you retire, we will tell you the amount you can
receive under each of these annuity choices.


WILL MY DEDUCTIONS STAY THE SAME IF PBGC TAKES OVER MY PLAN?

PBGC only withholds federal income taxes and certain court-ordered deductions.
You will have to pay separately any state taxes or other amounts (such as health
insurance) now being deducted.


HOW LONG WILL MY BENEFIT BE PAID?

PBGC will pay your benefit for the rest of your life. Your spouse or another
beneficiary may continue to receive a benefit after your death, depending on
the benefit option you choose when you start payments.

Last Updated: March 31, 2021

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