If you’ve read the state-wide news recently you know that a grocery store in Iowa has filed for bankruptcy. Included in the details is the report that pension benefits have been suspended. I was puzzled by a press statement that an individual had lost a significant sum of retirement money. The wording might have been misleading because individuals don’t contribute to pension plans; they are totally funded by the employer. Unlike a 401K , what you have is a promise of future benefits if the company remains in business and is financially sound. So will the individual lose all those promised payments? Maybe, maybe not.
Companies who still offer a pension plan can participate in the Pension Benefit Guaranty Corporation (PBGC). PBGC is a US government agency created in 1974. PBGC is not funded by general tax revenues; it collects insurance premiums from employers that sponsor insured pension plans. The premiums are invested to earn revenue and PBGC receives any remaining balances in a pension account if a company is dissolved due to bankruptcy.
The benefit for employees who are eligible for an insured pension is a guarantee they will receive at least part of their benefits if the company fails. The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2014, the maximum guarantee for workers who retire at age 65 is $59,318.16 yearly ($4,943.18 monthly). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.
At the PBGC website you can find out if your company participates; track down a lost pension; and find resources related to retirement. http://pbgc.gov/home.html A search of the site didn’t answer the question about the grocery store, but I did find my husband’s pension fund.