PBGC Educating Workers About Traditional Pensions
FOR IMMEDIATE RELEASE
July 27, 1998
The Pension Benefit Guaranty Corporation (PBGC) today announced the availability of a new publication, A Predictable, Secure Pension for Life: Defined Benefit Pensions, and a special section on its Internet site that provides easy-to-understand information on traditional pension plans insured by the federal insurance agency.
"This is important information both for workers who are covered by traditional pension plans and others who want to know how these plans operate and the advantages they provide. Only defined benefit pensions offer predictable, secure benefits for life," said PBGC Executive Director David M. Strauss.
The new publication -- the first that deals exclusively with traditional pension plans known as defined benefit pensions -- helps workers understand what defined benefit plans are, how they operate, and the rights and options of the workers covered by them.
The booklet and the special Internet section, which contains a map with state-by-state information on defined benefit plans, may be accessed through PBGC's website. A free copy of the new PBGC booklet is also available by writing to: Consumer Information Center, Dept. 639E, Pueblo, Colorado 81009.
A defined benefit pension is the type that promises to pay retired workers a specific monthly retirement benefit that continues for the rest of their lives. The amount of the benefit is known in advance, usually based on factors such as age, salary, and years of service.
The booklet also contains a pension checklist designed to help people already covered by a private-sector defined benefit pension plan to better understand the provisions of their specific pension plan and provides a handy place to keep information about their plan.
"The need to expand defined benefit pension coverage was made clear at the National Summit on Retirement Savings held in Washington, D.C. last month," noted Strauss. "Surveys presented at the Summit show that even if people have a 401(k), they are not saving enough on their own or at an early enough age to guarantee a secure retirement."
The booklet explains how defined benefit plans are protected by PBGC. While all private-sector pension plans are protected by provisions of pension law, only the defined benefit pension plan is federally insured. If a company can no longer stay in business and fund its defined benefit plan, PBGC steps in and pays pension benefits up to legal limits to those already retired and to others when they reach retirement age.
Today, some 42 million American workers are covered by insured defined benefit pension plans, but some 50 million others have no pension coverage of any kind; many of them employed by small businesses.
"We are getting the word out about the value of defined benefit plans and taking steps to remove the barriers to these plans that are of most concern to employers and workers," said Strauss.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
— ### —
PBGC No. 98-35