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Subject:  Re: If you're receiving a pension, heads-up. Date:  3/17/2014  12:45 AM
Author:  BruceCM Number:  74537 of 101509

The PBGC is not a Government Agency. It is private insurance funded through premiums charged to the plans they insure. However, like FDIC, they are backed by taxpayers should the premiums they raise not be sufficient.

There were a large number of insured plans that failed 2008/2010, and PBGC did have to go to Congress for added funding.

Government plans are not ERISA plans, so they are not eligible for PBGC insurance, but instead rely on the taxing authority of their states. Unlike ERISA plans, accrued benefits may be lost, depending on state laws.

Multi-employer plans (labor union sponsored plans) are insured but not to the extent of private insured plans. From the PBGC:

Multiemployer defined benefit pension plans are insured by PBGC. When a multiemployer plan becomes insolvent, PBGC provides financial assistance to cover the cost of guaranteed benefits to participants and the plan’s administrative expenses. (Unlike single-employer plans, PBGC cannot intervene in multiemployer plans prior to insolvency, and multiemployer plans continue to pay full benefits until they run out of assets.) The statutory guarantee limit for participants in multiemployer plans is $12,870 per year for a participant with 30 years of service; this is less than the benefits many multiemployer plans provide and less than PBGC guarantees in single-employer plans.

As long as the taxpayer is ultimately backing defaults, pensions will continue to be expensive to insure.

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