One of the most important ways PBGC protects retirement security is by working to preserve pensions, not just waiting until they fail. New Chief of Negotiations and Restructuring Sanford "Sandy" Rich will lead that effort.
Rich was selected to lead this department because he knows the inner workings of distressed trading, corporate restructuring, and investment banking; he has more than two decades of experience in the industry.
Now that we've given you a snippet of information about Sandy, allow him to introduce himself.
Check out his introductory video on YouTube.
A commonly asked question is how does PBGC determine how much a retiree receives? There's no simple explanation. The short answer is it's sort of complicated. The longer, more detailed answer is that the amount a retiree receives is dependent on a multitude of factors specified by law, one of which is the maximum guarantee limit, which is adjusted yearly.
Common Misconception: The guarantee limit is often misunderstood to be the maximum benefit PBGC can pay retirees. However, that is not the case.
In many cases retirees receive benefits from PBGC in excess of the maximum guarantee. Whether a retiree receives more than the guarantee depends on a number of factors, including:
1. What the retiree's earned benefit was before the plan terminated
2. How long they've been retired when PBGC takes over
3. The plan's funded status at termination
4. Whether any other limitations apply
FACT: According to a 2006 study, about 85% of retirees who get their pension from PBGC receive their entire earned benefit.
FACT: The guarantee is lower for those who retire early or when there is a benefit for a survivor.
FACT: The guarantee is increased for those who retire after age 65.
Find out more about the 2013 maximum insurance benefit.
PBGC's FY2012 Annual Report, released today, gives insight on the work we've been doing here at the agency. The roughly 120 page report covers the period that ended September 30, 2012.
The report kicks off with messages from the PBGC Board Chair, Hilda L. Solis and PBGC Director Josh Gotbaum, and highlights our great scores in customer service.
Retirees who rely on PBGC for their pension benefits rate the agency as one of the best in government.
We received a score of 89 on the American Customer Satisfaction Index (ACSI). That's more than 20 points above the government average (a score of 80 or higher is considered excellent, whether for a government agency or a private business). For retirees, the ease of applying for benefits and the reliability of monthly payments are of high importance, and they gave us high ratings in both categories.
Aside from our stand out customer service, the report also features:
- Our efforts to Preserve Pensions at American Airlines and other companies
- Our Insurance Programs
- Our approach on curbing PBGC's Deficit
In anticipation of the potential for Hurricane Sandy to shut down payment processing centers, the agency started sending checks days ahead of our regular schedule.
About 140,000 benefit payment checks are sent from our offices to benefit payees on a monthly basis. With Hurricane Sandy making a strong impact in our region, there is some risk that delivery of those checks may be delayed.
What we're doing: We're seeking more detail about how far into the distribution process the checks got over the weekend. We're also monitoring the USPS website to assess the impact of Post Office closings to PBGC payees. We will also provide data to the Customer Contact Center (1-800-400-7242) if there are major impacts.
On the other hand, there are no delays for those with direct deposit. We strongly encourage everyone who receives their benefit via check to switch to direct deposit through MyPBA (My Pension Benefit Account). It's timely, safe & secure.
Often times, people don't know what the Pension Benefit Guaranty Corporation (PBGC) is, or what we do. Unfortunately, many find out about us when we have to assume responsibility for their pension plans either by way of company bankruptcy or the company's inability to pay retirement benefits.
A quick history lesson: On September 2, 1974, President Ford signed the Employee Retirement Income Security Act (ERISA), creating a federal pension insurance program and an agency — the Pension Benefit Guaranty Corporation — to run it. The agency was created 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.
Now that you know how we got started, we'd like to tell you a little about how we operate.
As our director Josh Gotbaum likes to put it, PBGC is similar to the FDIC, but instead of protecting depositors of insured banks, we protect pensions.
FACT: We protect the retirement incomes of more than 44 million American workers in more than 27,500 private-sector defined benefit pension plans.
So, what's a defined benefit plan?
FACT: A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service.
FACT: We are not funded by general tax revenues.
So, how is the revenue generated?
FACT: We collect insurance premiums from employers that sponsor insured pension plans, earn money from investments, and receive funds from pension plans we take over.
Visit our Web site to learn more about who we are and how we operate.