Pension Benefit Guaranty Corporation

What Does Pension Benefit Guaranty Corporation Mean?

The Pension Benefit Guaranty Corporation (PBGC) is a federal insurance program responsible for funding certain pension plans when they are unable to meet their obligations. Managed by the Department of Labor, the PBGC provides essential financial support to retirees whose pension plans have been terminated.

Insuranceopedia Explains Pension Benefit Guaranty Corporation

Although the Pension Benefit Guaranty Corporation (PBGC) is a federal program, it is not funded by taxes. Instead, it is financed through premiums paid by employers. The PBGC’s obligation to pay is limited to a specific monthly amount, which is determined by the particular plan purchased by the employer. Because the PBGC’s monthly payout is capped, some retirees buy annuities to add a second source of guaranteed income on top of their pension. Others use life insurance for seniors to cover funeral costs and leave money to their family, since the PBGC only protects pension income.