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PBGC Blog: Retirement Matters

Hispanic Heritage Month

Each year, on September 15, we celebrate the start of National Hispanic Heritage Month. During this celebration, which runs through October 15, we recognize the significant impact Hispanic and Latino Americans have had on American history. We celebrate their rich culture and countless achievements. And this year's theme, "Hispanics: A legacy of history, a present of action and a future of success," reminds us of their profound impact on American culture. 

In his proclamation, President Obama said our Nation is strengthened when we lift up the Hispanic community. He also said when we create more ladders of opportunity, we provide hope for all Americans to reach their greatest potential.

But when looking at retirement preparedness, Hispanic Americans are often lower on the ladder than the general population.

Although many Americans face difficulty planning for retirement, Hispanic Americans face unique challenges that other minority groups do not. Hispanic Americans typically have less access to employer-provided benefits and contribute less on their own. The reason? Greater emphasis is usually placed on short-term financial security, such as eliminating debt. Saving for retirement is simply not a short-term priority.

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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.

PBGC will pay retirement benefits for 2,101 people covered by the APL/NVF Consolidated Pension Plan, which is sponsored by the estate of businessman Victor Posner. The estate has interests in about 40 entities that mostly focus on real estate development in Florida, Pennsylvania, and Maryland.

The agency is stepping in because the assets of the Posner estate are being distributed by a Florida Probate Court, and the pension plan will be abandoned. The APL/NVF Consolidated Pension Plan will end as of July 31, 2014.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of about $59,320 a year 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.

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Multiemployer graphic reading: What is a Multiemployer Plan? A multiemployer plan is a collectively bargained pension plan involving two or more unrelated employers, usually in a common industry such as construction, supermarket chains, trucking, textiles or coal mining.

PBGC runs two insurance programs that safeguard retirement benefits in different ways.

Lately, you may have heard about multiemployer plans and the financial troubles that some of them are having as described in our Projections Report. Currently, PBGC insures more than 10 million workers and retirees in about 1,400 multiemployer plans.

PBGC doesn't take responsibility for multiemployer plans; instead, we send financial assistance to plans that have run out of money to pay promised benefits. During FY 2013, PBGC paid $89 million in financial assistance to 44 multiemployer pension plans covering the benefits of nearly 50,000 retirees. An additional 21,000 people in these plans will receive benefits when they retire. 

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Despite substantial economic and market gains, multiemployer pension plans covering about 1.5 million people are severely underfunded, threatening benefit cuts for current and future retirees, according to the FY 2013 Projections Report released today by the Pension Benefit Guaranty Corporation. By comparison, the financial situation for private single-employer plans, which cover about 30 million participants, is projected to improve.

Image showing multiemployer plans coverage

As required by the Employee Retirement Income Security Act, PBGC annually provides an actuarial evaluation of its future expected operations and financial status. The FY 2013 Projections Report (formerly called the "Exposure Report") released today provides a range of estimates of the future status of private pension plans and their effect on PBGC's financial condition, drawn from hundreds of economic scenarios.

A new AARP survey shows that health care, education, financial security and the digital divide are among the most important social issues for African-Americans ages 50 and older.

The national survey, which included phone interviews with 650 respondents, demonstrates that while many older African-Americans are optimistic that the country is moving in the right direction when it comes to issues such as health care, education and the digital divide, they are significantly less optimistic about finances, employment and workforce discrimination. Lower levels of optimism related to finances and employment could directly impact their future retirement security.

Having a financially secure retirement was considered the second most important issue (cited by 16% of those with multiple answers), while access to high quality education was the third most important issue (cited by 14% of those with multiple answers).

Complete survey results can be viewed on the AARP website.