Pension Benefit Guarantee Corporation
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| Agency overview | |
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| Formed | September 2, 1974 |
| Headquarters | 1200 K Street, NW Washington, D.C. 38°54′08″N 77°01′44″W / 38.902188°N 77.028751°WCoordinates: 38°54′08″N 77°01′44″W / 38.902188°N 77.028751°W |
| Employees | 953 (2016) |
| Annual budget | $423 million (FY 2016) |
| Agency executive |
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| Website | www |
The Pension Benefit Guaranty Corporation (PBGC) is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations. Subject to other statutory limitations, PBGC's insurance program pays pension benefits up to the maximum guaranteed benefit set by law to participants who retire at 65 ($60,136 a year as of 2016). The benefits payable to insured retirees who start their benefits at ages other than 65 or elect survivor coverage are adjusted to be equivalent in value.
In fiscal year 2015, PBGC paid $5.6 billion in benefits to participants of failed single-employer pension plans. That year, 69 single-employer pension plans failed. PBGC paid $103 million in financial assistance to 57 multiemployer pension plans. The agency's deficit increased to $76 billion. It has a total of $164 billion in obligations and $88 billion in assets.
PBGC is not funded by general tax revenues. Its funds come from four sources:
PBGC pays monthly retirement benefits to approximately 826,000 retirees of 4,700 terminated defined benefit pension plans. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1.5 million people.
The single-employer program protects 30 million workers and retirees in 22,000 pension plans. The multiemployer program protects 10 million workers and retirees in 1,400 pension plans. Multiemployer plans are set up by collectively bargained agreements involving more than one unrelated employer, generally in one industry.
An employer can voluntarily ask to close its single-employer pension plan in either a standard or distress termination. In a standard termination, the plan must have enough money to pay all accrued benefits, whether vested or not, before the plan can end. After workers receive promised benefits, in the form of a lump sum payment or an insurance company annuity, PBGC's guarantee ends. In a distress termination, where the plan does not have enough money to pay all benefits, the employer must prove severe financial distress – for instance the likelihood that continuing the plan would force the company to shut down. PBGC will pay guaranteed benefits, usually covering a large part of total earned benefits, and make strong efforts to recover funds from the employer.
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