What is the Pension Benefit Guaranty Corporation (PBGC) established to do?

What is the Pension Benefit Guaranty Corporation (PBGC) established to do?

• A. Federal Deposit Insurance Corporation
• B. Social Security Administration
• C. Pension Benefit Guaranty Corporation (PBGC)
• D. Internal Revenue Service

Answer: (C)

PBGC exists to insure defined-benefit pension plans and to guarantee a portion of promised retirement benefits if a pension plan terminates with insufficient assets. It acts to protect retirees when employers struggle to fund their plans, stepping in and paying guaranteed benefits up to statutory limits. This function is distinct from other agencies: it isn’t the FDIC that protects bank deposits, nor the Social Security Administration that administers Social Security benefits, nor the IRS that handles taxes. Note that PBGC coverage mainly applies to private-sector defined-benefit plans (and some multiemployer plans); defined-contribution plans like 401(k)s aren’t insured by PBGC.

PBGC exists to insure defined-benefit pension plans and to guarantee a portion of promised retirement benefits if a pension plan terminates with insufficient assets. It acts to protect retirees when employers struggle to fund their plans, stepping in and paying guaranteed benefits up to statutory limits. This function is distinct from other agencies: it isn’t the FDIC that protects bank deposits, nor the Social Security Administration that administers Social Security benefits, nor the IRS that handles taxes. Note that PBGC coverage mainly applies to private-sector defined-benefit plans (and some multiemployer plans); defined-contribution plans like 401(k)s aren’t insured by PBGC.