Created by the Employee Retirement Income Security Act (ERISA), the Pension Benefit Guaranty Corporation (PBGC) seeks to protect employees’ pensions associated with defined benefit plans. Essentially, if the pension plans can’t pay the promised pensions, the PBGC may step in and fund a certain guaranteed amount.
Who Are PBGC Customers?
PBGC serves a broad range of clients, including but not limited to:
- About 1.5 million people to whom PBGC pays or owes pension payments
- Companies that provide pensions through PBGC pension plans
- Various professionals who assist in the payment of pensions
How Does PBGC Step In to Fund Pensions?
PBGC has the ability to step in and fund a certain amount of an employee’s pension that had not been fully paid. This capability comes from premiums paid by companies whose plans PBGC oversees. So, essentially, PBGC acts as an insurer of defined benefit plans in the private market.
The Pension Benefit Guaranty Corporation helps you find out more about a pension plan that may be owed to you but not yet claimed. For example, a former employee may lose track of his pension when a company:
- Declares bankruptcy
- Divides into several other companies and does not retain an original name
- Closes down its local offices or simply disappeares
Under all of the above scenarios, PBGC may help you locate your pension plan.
What Pension Plans Are Not Protected by PBGC?
While PBGC insures defined benefit plans offered by employers, it may not apply to other plans. PBGC’s protections do not apply to the following pension plan categories:
- Defined contribution plans and 401(k) plans
- Plans offered by the government
- The so-called "professional service employers" with less than 26 employees
- Religious groups
Seeking Legal Help
If you have trouble locating your pension plan or if you believe that your employer violated its pension obligations, you may need to speak with a qualified employment lawyer to help you understand the steps you should take to receive your pension benefits.