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PBGC Blog: Retirement Matters

Coins in a nest.From Phyllis C. Borzi, Assistant Secretary of Labor for Employee Benefits Security:

Women have made enormous strides over the past three decades, in the workplace and beyond – and it's important to reflect on the men and women who fought for the changes that have led to greater gender equality. One of those changes was introduced 29 years ago: The Retirement Equity Act became law, ushering in important protections for America's workers and their families.

As the assistant secretary for the Employee Benefits Security Administration, one of my chief responsibilities is to oversee the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, which sets minimum standards for pension plans.

ERISA was and is an important law that protects the retirement savings of America's workers, but the law's original text had some significant shortcomings, and those shortcomings disproportionately affected women.

ERISA has strict prohibitions against the "alienation of benefits," so that creditors could not claim an employee's pension benefits. But as written in 1974, this also meant that divorced women were unable to obtain their fair share of their ex-husband's retirement benefits – even if a woman had forfeited a career of her own in order to support a husband or raise the couple's children.

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MyPBA  (My Pension Benefit Account) is our secure online service that lets you, the participant, handle certain common transactions with PBGC.

Participants in PBGC-trusteed plans can use PBGC's fast, free, and secure online service tool to apply for pension benefits, update contact information, adjust federal income tax withholding, and more.

Since generations accustomed to using technology are joining the ranks of retirees, this helps PBGC in enhancing technological resources, making your interactions with PBGC easier and more user-friendly.  

The old system, which came online around 2004, has been decommissioned, while the new MyPBA recently got a facelift complete with features designed to give participants a more convenient option to calling the agency's Customer Contact Center.

Some of the new and improved items include:

  • login
  • registration
  • email communications

About 250,000 participants with MyPBA accounts are expected to use the new MyPBA system at some time in the future.

But, if you wish to call PBGC's Customer Contact Center, we'd still like to hear from you!

Right now, the Powerball jackpot stands at $425 million, but whoever wins it will probably be broke within a few years. That's what happens to 70% of winners, according to the National Endowment for Financial Education.

That made us think about retirement. (We know, we know... what doesn't?)

Lottery winners can choose to take annual payments, pay lower taxes on their newfound windfalls, and have 30 years before worrying about running out of money. But research shows that the vast majority of winners choose to take a windfall lump sum instead.

But those who take the lump sum apparently don't "invest" it so wisely.

So if you're the lucky Powerball winner, unless you plan to keep your job, think twice about how to fund your retirement, and whether to take your winnings all at once. Remember, that gigantic pot of money has to last your whole life, not just a few years.

And even if you don't win the lottery, beware of a lump sum of whatever size. It may look good now, but you take on the risk that you'll outlive it. Most folks do better with guaranteed income.

Like the old saying goes "if you don't use it, you lose it." A study of nearly half a million people in France revealed that people who delay retirement have less risk of developing Alzheimer's disease or other types of dementia.

Read the full Associated Press article on the USAToday website

Close-up photo of calendar

Today, June 18, is National Splurge Day.

There are certain days and times of year that most people look forward to. Perhaps National Splurge Day is one of those days marked on your calendar. However, in calendars that haven't been printed yet, you may look forward to marking the day you can retire.

According to Holiday Insights, here's how to properly join in the National Splurge Day festivities:

Treat yourself excessively, to anything you want. And, to excess if you desire. Isn't that a great thing? Maybe, you're on a diet, and that special dessert is too many calories. Maybe, you want to buy a steak, and the budget is a little tight. Toss out the reservations, and go for it today.

A steak or a dessert is one thing, but don't go crazy. There's one kind of splurge you may really regret — the multi-thousand-dollar retirement binge. Too many people retire and "treat themselves" to a fancy new car or an extravagant vacation that they don't really need, and in the long run can't afford. And even while they're still working, too many people downgrade their future retirement income through "leakage" from their 401(k) plans — loans and cash-outs between jobs.

So, on National Splurge Day, go ahead, treat yourself. But definitely don't cheat yourself or your retirement. 

10 Ways to Pay...

  |   June 10, 2013

In the article, "10 Ways to Pay for Retirement," U.S. News & World Report lists the most common ways to pay for retirement.

  1. Social Security.
  2. A pension.
  3. Retirement accounts.
  4. Home equity.
  5. Stock market investments.
  6. Savings accounts.
  7. Annuities or insurance plans.
  8. Part-time work.
  9. An inheritance.
  10. Rent and royalties.

Pensions are a big part of how people prepare for retirement, along with working longer, saving more, and — as a last resort — tapping home equity. Read the full article.