PBGC will pay retirement benefits for 233 people covered by a plan sponsored by the Los Angeles Urban League Inc., a local chapter of the National Urban League, a non-profit civil rights organization.
In addition to the organization's work to advance equal opportunities for African American and other minority youths, the group also ran a Head Start program, which provided early education for pre-kindergarten students.
The agency is stepping in because the organization is unable to fund the plan that covers Head Start employees. The Defined Benefit Pension Plan of Los Angeles Urban League Head Start State Pre-school will end as of Aug. 31, 2014.
We recently created an online resource that provides information to assist with "Making a Choice: Lump Sum or Annuity?"
Many people with a retirement plan face the decision of choosing between an annuity and a lump sum payment to fund their day-to-day life after they stop working. An annuity provides a lifetime steady stream of income whereas a lump sum is a one-time payment.
The new resource page allows you to get some insight on key questions (click on the question for the answer) that should be answered when making this important decision and offers other hypothetical scenarios you may face.
You can also share this new page on our site by using the share icons at the bottom.
The news isn't good for 1.5 million people across the country in a swath of multiemployer plans. According to PBGC's Projections Report, released last week, these plans are likely to fail putting the retirement benefits of current and future employees in jeopardy. Not only that, but if those plans fail it may bring down the entire system and with it the retirement security of the 10 million people within it.
Right now, there are more than 10 million people and their families covered by about 1,400 multiemployer plans in industries like construction, mining, supermarkets, transportation, and hospitality. Massive losses during the economic slowdown in 2008-2009, left many plans seriously underfunded. The economy has improved significantly, but for the plans most in trouble, the improved economy was not enough. These plans responded by increasing contributions and reducing future benefits but it still wasn't enough.
PBGC will pay retirement benefits for more than 1,400 current and future retirees of Interfaith Medical Center, which operates a 287-bed hospital in Brooklyn, N.Y.
The agency stepped in because Interfaith Medical is unable to meet the minimum funding requirements for the two pension plans it sponsors.
PBGC will pay all pension benefits earned by Interfaith Medical's retirees up to the legal limit of about $55,840 for a 65-year-old.
Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
The best time to start thinking about and saving for retirement is always right now.
While that's true for everyone, recently there's been a steady flow of stories about twenty and thirty-somethings to get them ready for life after work.
That's because the estimates for how much a 20-year-old needs to save go as high as $7 million.
For some, the enormity of the task has paralyzed them into inaction, while others view themselves as highly disciplined money managers - a trait discussed in a recent report by Time.
There are many in the financial planning community who advise starting a savings plan with at least 10 percent of your yearly income. But for a generation with competing financial concerns like rent, car payments, and student loans, it's too easy not to save now for a need that's decades away.
In the recently published article "Thought Secure, Pooled Pensions Teeter and Fall," New York Times reporter Mary Williams Walsh gets candid commentary from PBGC Director Josh Gotbaum on the crisis facing the multiemployer pension system.
Gotbaum was quoted saying, "If Congress allows the PBGC to get the money and the authority it needs to do its job, then these plans can be preserved," he added. "If not, the PBGC will run out of money, too, and multiemployer pensioners will get virtually nothing. This is not something that can wait a few years. If people kick the can down the road, they'll find it went off a cliff."
Read the full article and find out more about multiemployer pension plans.