The Pension Benefit Guaranty Corporation (PBGC)

The Pension Benefit Guaranty Corporation is the federal corporation that administers the pension insurance program. The PBGC protects the retirement incomes of nearly 42 million American workers in 30,330 private-sector defined benefit pension plans. A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service.

PBGC was created by the Employee Retirement Income Security Act of 1974 to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum. Defined benefit pension plans promise to pay a specified monthly benefit at retirement, commonly based on salary and years on the job.

PBGC is not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.

PBGC pays monthly retirement benefits, up to a guaranteed maximum, to about 612,000 retirees in 3,683 pension plans that ended. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,271,000 people.

The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans ended in 2006, workers who retire at age 65 can receive up to $3,971.59 a month ($47,659.08 a year). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.

PBGC does not insure defined contribution plans, under which contributions are made by or on behalf of employees into individual employee accounts with no promise as to the amount of payouts. Defined contribution plans include 401(k) plans, profit-sharing plans, money-purchase plans, and employee stock ownership plans (ESOPs).

Board of Directors

PBGC is headed by a Director who reports to a Board of Directors consisting of the Secretaries of Labor, Commerce and Treasury, with the Secretary of Labor as Chairman.

The Corporation is aided by a seven-member Advisory Committee appointed by the President of the United States to represent the interests of labor, employers, and the general public. ERISA outlines several specific responsibilities for PBGC's Advisory Committee, including advising on policies and procedures for PBGC's investments, the trusteeship of terminated plans, and on other matters as determined by PBGC.

PBGC operates under the guidance of its Board of Directors, which consists of:

Elaine L. Chao is the Nation’s 24th Secretary of Labor and the first Asian American woman appointed to a President's cabinet in U.S. history. During her tenure, the Department updated the white collar overtime regulations under the Fair Labor Standards Act, which has been on the agenda of every Administration since 1977.
In 2003, the Department achieved the first major update of union financial disclosure regulations in more than 40 years, giving rank and file members enhanced information on how their hard-earned dues are spent. The Department has set new worker protection enforcement records, including recovering record back wages for vulnerable low wage immigrant workers. The Department has also launched comprehensive reform of the nation's publicly funded worker training programs, to better serve dislocated and unemployed workers. On August 17, 2006, President Bush signed the Pension Protection Act, which protects the 44 million workers whose retirement security rests upon private sector defined benefit pension plans. Secretary Chao's career has spanned the public, private and non-profit sectors. Her government service also includes serving as Deputy Secretary at the U.S. Department of Transportation, Chairman of the Federal Maritime Commission, Deputy Maritime Administrator in the U.S. Department of Transportation and White House Fellow. She has also worked in the private sector as Vice President of Syndications at BankAmerica Capital Markets Group and a banker with Citicorp. Prior to her nomination as Secretary, she was a Distinguished Fellow at The Heritage Foundation.
US Department of Labor - http://www.dol.gov/

He is the 35th Secretary of the U.S. Department of Commerce, the voice of business in government. The former chairman of the board and chief executive officer of Kellogg Company, Secretary Gutierrez is a core member of President Bush’s economic team. Secretary Gutierrez oversees a diverse Cabinet agency with some 38,000 workers and a $6.5 billion budget focused on promoting American business at home and abroad. Department gathers vast quantities of economic and demographic data to measure the health and vitality of the economy, promotes U.S. exports, enforces international trade agreements and regulates the export of sensitive goods and technologies. Commerce also issues patents and trademarks, protects intellectual property, forecasts the weather, conducts oceanic and atmospheric research, provides stewardship over living marine resources, develops and applies technology, measurements and standards, formulates telecommunications and technology policy, fosters minority business development and promotes economic growth in distressed communities.
US Department of Commerce - http://www.commerce.gov/

The 74th Secretary of the Treasury from June 19, 2006. Paulson graduated from Dartmouth in 1968.
Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs. He joined Goldman Sachs in 1974 in the Chicago Office and became a partner in 1982. From 1983 until 1988, Paulson headed up Investment Banking Services for the Midwest Region and became Managing Partner of the Chicago Office in 1988. In 1990, he was named Co-head of the firm's investment Banking Division, and in 1994 he rose to the position of President and Chief Operating Officer. In 1998, he was named Co-Senior partner, and with the firm's public offering in 1999, became Chairman and CEO.
US Department of Treasury - http://www.ustreas.gov/

PBGC serves a range of customers with disparate interests and expectations. First are the 1,161,000 people to whom the agency pays or owes pension benefits. These participants in private-sector plans now administered by PBGC depend on PBGC for their retirement security and expect quick, accurate benefit determinations and prompt, uninterrupted benefit payments.

PBGC's customers also include the companies with PBGC-insured plans and the pension professionals who assist them. These practitioners and plan administrators expect PBGC to promptly and accurately process their premium payments, dispense reliable advice and rulings, and resolve issues affecting their plans quickly and responsively. Practitioners include plan sponsors and pension professionals such as lawyers, accountants, and actuarial consultants.

PBGC also serves a range of customers interested in retirement planning and pension plans, such as:

- Congress
- Federal Agencies and State Government
- General Public
- Media
- PBGC Employees and Contractors

How PBGC working:

1 Step - Money PBGC Takes In and Pays Out

PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
PBGC pays monthly retirement benefits, up to a guaranteed maximum, to about 612,000 retirees in 3,683 pension plans that ended. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,271,000 people.

2 Step - Two Pension Insurance Programs

The single-employer program protects more than 34 million workers and retirees in about 28,800 pension plans. The multiemployer program protects 9.9 million workers and retirees in about 1,540 pension plans. Multiemployer plans are set up by collectively bargained agreements involving more than one unrelated employer, generally in one industry.

3 Step - PBGC reviews your plan's records to determine what benefits each person will receive.

To ensure PBGC has the correct information, corporation will ask you to complete an information form.
If you are already receiving a pension, PBGC will continue paying you without interruption during corporation review. These payments, an estimate of the benefits that PBGC can pay under the insurance program, may be less than you were receiving from your plan but will be paid in the annuity form you chose at retirement.
If you have not yet retired, PBGC will pay you an estimated benefit when you become eligible and apply to PBGC to begin payments.

You can find more information about Pension Benefit Guaranty Corporation on www.pbgc.gov/