PBGC


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PBGC

Pension Benefit Guaranty Corporation

A non-profit corporation under the United States Department of Labor guaranteeing the pensions of some private companies. Established in 1974, it is designed to take over the pensions of participating companies should they become insolvent. It does not derive its revenues from taxation; rather, it collects premiums from participating companies as if it were an insurance policy. It was not designed to protect bankrupt companies; rather, it exists as part of a social safety net for former employees of these companies. It is headed by a Director, who is appointed by the U.S. President upon confirmation of the Senate.

Pension Benefit Guaranty Corporation (PBGC).

The PBGC was created to ensure that participants in defined benefit pension plans under its jurisdiction will receive at least a basic pension if the plans are terminated because they're underfunded and so unable to meet their obligations.

The maximum benefit is adjusted each year for plans terminated in that year to reflect increases in Social Security.

Covered plans, which include those with 25 or more participants, must pay annual premiums to the PBGC to help fund this federal corporation.

The PBGC also tries to find people who participated in, and are due benefits from, plans that are no longer operating.

References in periodicals archive ?
Beginning in January, terminating defined contribution plans will have the option of transferring missing participants benefits to PBGC instead of establishing an IRA at a financial institution.
Comments may be submitted to the PBGC on or before November 21.
Under the new law, PBGC is authorized to promote mergers of critical and declining plans into more healthy plans by providing financial assistance, if a merger will reduce PBGC's potential liability.
Last spring, then-agency Director Josh Gotbaum said it has done so "in ways that both underfunds PBGC and is convincing some companies they shouldn't offer pensions at all.
She also questioned whether the increases were in the best interests of the PBGC.
While the Federal Reserve Board's low-interest rate policy "is appropriately designed to help spur economic recovery," Klein added, "it has the perverse effect of undervaluing pension assets, understating the funding levels of employer-sponsored plans and the financial position of the PBGC itself.
PBGC director Joshua Gotbaum has pushed back against any attempt by American Airlines to terminate its pension plans, claiming it would saddle his agency with $17 billion in benefit obligations.
It is also likely that creditors including the bondholders, the PBGC and vendors will own a significant stake in a reorganized American Airlines, or in the surviving entity in any American Airlines merger.
When an insured pension plan terminates, the PBGC assumes the plan's assets as well as the responsibility for paying promised benefits up to a cap set in law.
Over the past several years, however, the PBGC has struggled to settle on an investment policy for its millions of dollars in assets.
For details regarding the termination of a plan by the PBGC, see Chapter XII.
Global Banking News-30 December 2008-BlackRock, Goldman and JP Morgan to manage PBGC funds(C)2008 ENPublishing - http://www.