Pension Benefit Guaranty Corporation Introduction and Overview


The Pension Benefit Guaranty Corporation (PBGC) is a federal government agency that was established in 1974 to protect the benefits of participants in private-sector defined benefit pension plans. The PBGC runs two insurance programs: a single-employer program and a multi-employer program. Single-employer pension plans are plans to which one employer makes contributions. Multi-employer pensions are collectively bargained pension plans to which more than one employer contributes. The single-employer program is the larger of the two insurance programs.

The PBGC oversees the termination of single-employer defined benefit pension plans and pays the benefits to participants in those terminated plans which do not have assets sufficient to pay 100 percent of promised benefits. There is a statutory maximum benefit which the PBGC is allowed to pay (currently $54,000 per year for a worker in a pension plan terminated in 2011 who receives a single-life annuity beginning at age 65). Most participants in terminated pension plans receive the full benefit earned at the time of plan termination.

The PBGC does not pay benefits to participants in multi-employer pensions. Rather, the PBGC provides insolvent multiemployer plans with financial assistance, in the statutorily-required form of loans, sufficient to pay PBGC guaranteed benefits and reasonable administrative expenses.

The two insurance programs are financed by premiums paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by the PBGC, and recoveries from the companies formerly responsible for the trusteed plans. The PBGC does not receive any funds from general tax revenues and the obligations of the PBGC are not obligations of the U.S. government. The PBGC had a deficit of $23.2 billion at the end of fiscal year 2010, of which $21.6 billion was from the single-employer program. Although the program currently operates at a deficit, the PBGC has sufficient assets to pay the benefits of retirees for the foreseeable future.

Chapter Overview

This chapter of the Green Book includes Congressional Research Service (CRS) Reports, a Tables and Figures section, and a Legislative History. An update of the 2008 Green Book chapter on PBGC is included among the CRS reports.