Pension Benefit Guaranty Corporation in the United States

The Pension Bene?t Guaranty Corporation protects the pension bene?ts of nearly 44
million Americans who participate in de?ned-bene?t pension plans sponsored by
private-sector employees.

The Pension Bene?t Guaranty Corporation (PBGC) is a self-?nancing,
wholly owned Government corporation subject to the Government Corporation
Control Act (31 U.S.C. 9101–9109). The Corporation, established by title IV of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1301–1461),
operates in accordance with policies established by its Board of Directors,
which consists of the Secretaries of Labor, Commerce, and the Treasury.

The Secretary of Labor is Chairman of the Board. A seven-member Advisory
Committee, composed of two labor, two business, and three public members
appointed by the President, advises the agency on investment issues.

Activities

Coverage

The Corporation insures most private-sector de?ned-bene?t pension plans, which provide a pension bene?t based on factors such as age, years of service, and salary.

The Corporation administers two insurance programs, separately covering
single-employer and multiemployer plans. Nearly 44 million workers and
retirees participate in more than 29,000 covered plans.

ingle-Employer Insurance

Under the single-employer program, the Corporation guarantees payment of basic pension bene?ts if an insured plan terminates without suf?cient assets to
pay those bene?ts. However, the law limits the total monthly bene?t that the
agency may guarantee for one individual to $4,500 per month for a 65-yearold
individual in a pension plan that terminates in 2010. The law also sets
other restrictions on PBGC’s guarantee, including limits on the insured amount
of recent bene?t increases. In certain cases, the Corporation may also pay
some bene?ts above the guaranteed amount depending on the funding level
of the plan and amounts recovered from employers.

A plan sponsor may terminate a single- employer plan in a standard termination
if the plan has suf?cient assets to purchase private annuities to cover all
bene?t liabilities. If a plan does not have suf?cient assets, the sponsor may seek
to transfer the pension liabilities to the PBGC by demonstrating that it meets the
legal criteria for a distress termination. In either termination, the plan administrator
must inform participants in writing at least 60 days prior to the date the
administrator proposes to terminate the plan. Only a plan that has suf?cient
assets to pay all bene?t liabilities may terminate in a standard termination.

The Corporation also may institute termination of underfunded plans in
certain speci?ed circumstances.

Multiemployer Insurance

Under title IV, as revised in 1980 by the Multiemployer Pension Plan Amendments Act (29
U.S.C. 1001 note), which changed the insurable event from plan termination
to plan insolvency, the Corporation provides financial assistance to
multiemployer plans that are unable to pay nonforfeitable bene?ts. The plans are
obligated to repay such assistance. The act also made employers withdrawing
from a plan liable to the plan for a portion of its unfunded vested bene?ts.

Premium Collections

All de?nedbene?t pension plans insured by PBGC are required to pay premiums to the
Corporation according to rates set by Congress. The per-participant ?at-rate
premium for plan years beginning in 2010 is $35.00 for single-employer plans and $9.00 for multiemployer plans. Underfunded single-employer plans
must also pay an additional premium equal to $9 per $1,000 of unfunded
vested bene?ts. A termination premium of $1,250 per participant per year applies
to certain distress and involuntary plan terminations occurring on or after January
1, 2006, payable for 3 years after the termination.

For further information, contact the Pension Bene?t Guaranty Corporation, 1200 K Street NW., Washington, DC 20005–4026. Phone, 202–326–4400 or 800–736–2444. Internet, http://www.pbgc.gov.