History

• The Employee Retirement Income Security Act of 1974 established the Pension Benefit Guaranty Corp. (PBGC) to protect the pension benefits of millions of workers.
  
  

Function

• If an employer terminates its pension plan but does not have enough funds in the plan to pay participants their accrued benefits, PBGC insurance will pay the benefits earned as of the termination date, up to a maximum set by law.
  
  

Funding Sources

• The PBGC finances its operations solely from insurance premiums, investment earnings, assets of plans taken over by the PBGC and amounts recovered from plan sponsors.
  
  

Types

• The PBGC insures most defined benefit pension plans but does not cover plans offered by government employers, religious organizations or professional service employers (i.e., doctors or lawyers) with fewer than 26 employees. It also does not cover defined contribution plans, including 401k and profit sharing plans.
  
  

Verifying Coverage

• To determine if your plan is covered, refer to your summary plan description, which explains key features of the plan, including whether or not it is insured by the PBGC.