Pension Benefit Guaranty Corporation


The Pension Benefit Guaranty Corporation (PBGC) protects workers and ensures that they receive defined-benefit (DB) pension benefits even if their employers go bankrupt. The failure of some large, highly underfunded pension plans sponsored by bankrupt companies has jeopardized the PBGC’s financial status. In addition, severely underfunded multi-employer pension plans that cover many companies have strained the resources of the PBGC fund that insures them. Over the past few decades, changes have been made to strengthen both insurance funds. In response to growing PBGC liabilities, reforms enacted in 1994 and 2006 mandated that the financing gap of underfunded plans be closed more quickly. This required larger contributions from these plans than those paid by better-funded plans. The reforms also raised insurance premiums for plans that were most at risk. They strengthened the agency’s enforcement powers, required employers to disclose more details about underfunded plans, and placed new limits on benefit increases and accruals, lump-sum payouts, and PBGC benefit guarantees in certain underfunded plans. Since then, Congress further raised premiums to raise money for other programs. In response to the problems with multi-employer plans, Congress passed a reform bill in 2014. However, that bill also allowed some plans to cut benefits for both current and future retirees. Further improvements in the PBGC are necessary.



Funding rules

Policymakers must maintain adequate funding rules for defined-benefit pension plans.

Information and disclosure

Employers should be required to keep plan participants informed adequately and in a timely manner about the state of plan funding.

Distressed pension plans—as defined in the Employee Retirement Income Security Act (ERISA)—that are subject to ERISA funding standards and Pension Benefit Guaranty Corporation insurance should be required to provide annual disclosures to participants and beneficiaries. The required disclosures should state that if a plan terminates, there are circumstances that may cause participants to receive retirement benefits that are less than their accrued, vested benefits. Such disclosures, when required, should accompany periodic benefit statements furnished to individual participants. In such years when periodic benefit statements are not furnished, the disclosures should accompany the plan’s annual report.


Plan participants should receive their guaranteed benefits from the Pension Benefit Guaranty Corporation when an employer files for bankruptcy or otherwise seeks refuge from paying accrued pension rights.

Payments should be made without delay or interruption.

Fiduciary rules

The Department of Labor must stringently enforce fiduciary rules to ensure that pensions are handled prudently and in the best interest of plan participants and beneficiaries.