About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (February 7, 2023)

handle is hein.crs/govekmk0001 and id is 1 raw text is: Congressional Research Service Informing the legislitive debate since 1914 Updated February 7, 2023 An Overview of the Pension Benefit Guaranty Corporation (PBGC) The Pension Benefit Guaranty Corporation (PBGC) is a government corporation established by the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93- 406). It was created to protect the pensions of participants and beneficiaries by paying participants' benefits if the pension plan is unable to do so. PBGC insures only private sector single-employer and multiemployer defined benefit (DB) pension plans. These plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Single-employer pension plans are sponsored by one employer and cover eligible workers employed by the plan sponsor. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. Defined contribution (DC) plans, such as 401(k) plans, are not insured. More information about PBGC is available in CRS Report 95-118, Pension Benefit Guaranty Corporation (PBGC): A Primer. In FY2022, PBGC insured approximately 25,000 DB pension plans covering about 33 million people. PBGC operates two distinct insurance programs: one for single- employer plans and a second for multiemployer plans. PBGC maintains separate reserve funds for each program, and funds from the reserve of one program may not be used for the other program. The American Rescue Plan Act of 2021 (P.L. 117-2) authorized Special Financial Assistance (SFA)-a new program-for eligible financially troubled multiemployer DB plans. PBGC Admirnstration PBGC is a government-owned corporation. A three- member board of directors, chaired by the Secretary of Labor, administers the corporation. The Secretary of Commerce and the Secretary of the Treasury are the other members of the board of directors. The director of PBGC is appointed by the President with the advice and consent of the Senate. ERISA also provides for a seven-member advisory committee, appointed by the President, for staggered three-year terms. The advisory committee advises PBGC on issues, such as investment of funds, plan liquidations, and other matters. PBGC Financing PBGC's single-employer and multiemployer insurance programs are required by ERISA to be self-supporting. These programs receive no appropriations from general revenue. SFA provides assistance to multiemployer plans but is accounted for separately from the traditional financial assistance provided by PBGC's multiemployer insurance program to insolvent plans. Although ERISA states that the United States is not liable for any obligation or liability incurred by the corporation, funds provided through the enactment of SFA are intended to ensure the continued solvency of the multiemployer program. The single-employer and multiemployer programs are funded by premiums set by Congress and paid by the private sector employers that sponsor DB pension plans. Other sources of income for the single-employer program are assets from terminated plans taken over by PBGC, investment income, and recoveries collected from companies when they end underfunded pension plans. In addition to premiums, the multiemployer program also receives investment income on its revolving fund assets. The SFA program, which is financed by appropriations from Congress, results in a new source of financing outside of PBGC's revolving fund. Premiums The sponsors of private sector pension plans pay a variety of premiums to PBGC. The sponsors of single-employer and multiemployer pension plans pay a flat-rate, per- participant premium. The sponsors of underfunded single- employer pension plans pay an additional premium that is based on the amount of plan underfunding. In addition, pension plans that are terminated in certain situations pay a per-participant premium per year for three years after termination. Except for the termination premium, the premiums are increased annually for changes in the national wage index. In 2023, the premiums are * Single-employer flat-rate premium: The sponsors of single-employer DB plans pay an annual premium of $96 for each participant in the plan. * Single-employer variable-rate premium: The sponsors of underfunded single-employer DB plans pay an additional annual premium of $52 for each $1,000 of unfunded vested benefits. There is a per-participant limit of $652 for this premium. * Single-employer termination premium: The sponsors of single-employer DB plans that end in certain situations pay an annual premium of $1,250 per participant per year for three years following plan termination. * Multiemployer flat-rate premium: The sponsors of multiemployer DB plans pay an annual premium of $35 for each participant in the plan. Pension Benefit insurance Programs In the single-employer program, PBGC becomes the trustee of terminated, underfunded single-employer DB plans. The

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most