Can I count on the money to be there when I need it?
- What's a defined benefit plan?
- Can I decide how my money is invested?
- What's the difference between a defined benefit plan and a defined contribution plan?
- What happens when I retire?
- Exactly how much will I get when I retire?
- Am I eligible for a defined benefit plan?
- Just how common are defined benefit plans?
- What if I work for the government?
- What are the advantages of a defined benefit plan?
- What are the disadvantages of a defined benefit plan?
- Can I tap my money early?
- Can I count on the money to be there when I need it?
- Will PBGC payouts be as big as I was counting on?
- Is there insurance on government plans?
- How can I make sure my pension is covered by the PBGC?
If your employer is a company that's still in business when you retire, it will make the payouts. There's a federal law called the Employee Retirement Income Security Act, or ERISA, that makes sure of that. Still, it's possible that your company might run into a financial mess that puts your defined benefit payout in jeopardy.
That's why most pensions offered by companies are part of the federal Pension Benefit Guarantee Corp. Much like the FDIC insures bank deposits if a bank fails, the PBGC will step up to the plate if a company goes out of business or declares bankruptcy, and says it doesn't have the money set aside to pay all the future benefits you expected to get when you retired. The PBGC insures the pensions of more than 40 million workers in more than 44,000 private defined benefit plans.
