Chapter 12: Pension Benefit Guaranty Corporation (PBGC)

Issues: Pension Benefit Guaranty Corporation

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 multiemployer program. Single-employer pension plans are plans to which one employer makes contributions. Multiemployer pension plans 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% of promised benefits. There is a statutory maximum benefit that the PBGC is allowed to pay, which is indexed annually for inflation ($65,045 per year for a participant in a pension plan terminated in 2018 who receives a single-life annuity beginning at age 65). Most participants in terminated single-employer pension plans receive the full benefit earned at the time of plan termination. 

The PBGC does not directly pay benefits to participants in multiemployer pensions. Rather, the PBGC provides insolvent multiemployer plans with financial assistance, sufficient to pay PBGC guaranteed benefits and reasonable administrative expenses. Such assistance is in the statutorily-required form of loans, which the PBGC indicates are rarely repaid. The PBGC statutorily guaranteed benefit for a participant in a multiemployer plan generally is the participant’s years of service times 100% of the first $11 of the monthly benefit rate and 75% of the next $33 of the monthly benefit rate. Thus, a participant with 30 years of service would receive a maximum annual benefit of $12,870.  This benefit amount is not indexed for inflation.

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.

Congressional Research Service (CRS) Reports

For more programmatic information, please see reports published by the Congressional Research Service.

CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

Legislative History

The following provides a legislative history for the Pension Benefit Guaranty Corporation from the prior Green Book through most of the 115th Congress. For prior legislative history, please see prior editions of the Green Book.

The Bipartisan Budget Act of 2018 (P.L. 115-123) created the Joint Select Committee on Solvency of Multiemployer Pension Plans to improve the solvency of multiemployer pension plans and the PBGC. The committee shall provide to Congress no later than November 30, 2018, recommendations and legislative language to significantly improve the solvency of multiemployer pension plans and the PBGC. P.L. 115-123 provides for expedited procedures in the Senate if the committee approves of the proposed legislative language. There are no provisions that provide any special procedures governing House consideration of such legislation.


This page was prepared in November 2018 for the 2018 version of the House Ways and Means Committee Green Book.