Quote:
Originally Posted by Toymeister
You should be aware of it. It is called the Pension Benefit Guaranty Corporation. It was created by an act of Congress in 1974, in part because of Studebaker taking all their employees pensions.
It works like the FDIC for banks. Companies pay a insurance premium, which they must do. Muncipalites are an exception. It guarantees a minimum level for a pension. It is a Quasi Government organization and about as efficient as you would expect.
Because of the insurance premium 401Ks got their start and pensions were dropped.
The Studebaker employees got nothing, BTW
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Just like the above post states, the PBGC, or Pension Benefit Guarantee Corporation, is a quasi Government entity which operates with the efficiency of the Government, which is self explanatory (and very scary). It's surplus, or ability to shore up unfunded pensions, is minimal compared to the potential liabilities it could face. If the stock market has a major correction, many pension funds will go belly up and could very quickly wipe out the ability of the PBGC to insure guaranteed minimum pension payouts. We have a pension that we "ARE HOPING TO" rely on as a major part of our retirement income. However, never make the naive assumption that the pension will be there forever. All we can do is HOPE that the assets backing our pensions, which are heavily invested in stocks, do not crash and burn. If that happens, so will our pensions. Fingers crossed!