PBGC

The Pension Benefit Guaranty Corporation (PBGC) is a United States federal government agency created by the Employee Retirement Income Security Act of 1974 to protect retirement incomes in private-sector defined-benefit pension plans. Its primary function is to insure defined-benefit plans and guarantee payment of a portion of benefits if a covered plan terminates with insufficient funds to meet promised benefits.

PBGC administers two insurance programs: a single-employer program covering most private-sector defined-benefit plans sponsored by a single employer, and a multiemployer program covering plans funded by contributions from multiple employers within an industry or trade. The agency does not insure defined-contribution plans, such as 401(k) plans or IRAs. When a covered plan terminates, PBGC pays guaranteed benefits up to statutory limits.

Guaranteed benefits are determined by the plan's benefit formula and years of service, subject to statutory maximums. The actual payment may be reduced if the plan's assets are insufficient. The agency's funding comes from insurance premiums paid by plan sponsors, investment income from its portfolio, and recoveries from insolvent plans. In some cases, PBGC may assume responsibility for winding down a failed plan and ensuring ongoing benefit payments.

Financially, PBGC operates two separate programs with different funding outlooks. Both programs have faced funding challenges in recent years, particularly the multiemployer program, which has been the focus of policy debate and reform discussions in Congress. The agency emphasizes transparency and provides annual reports and financial statements to Congress and the public.

Headquartered in Washington, D.C., PBGC is an independent federal agency led by a Director appointed by the President and confirmed by the Senate, with oversight by Congress.