Could This One Federal Agency Go Bankrupt? Consider Taking This Step.
The Pension Benefit Guaranty Corporation (PBGC) serves an important purpose. It was established to bail out company pension plans in the event there was financial trouble or corporate bankruptcy. They are there to make sure that retirees get their monthly pension payments as promised. Think of it as the FDIC of pension plans.
The PBGC currently covers 10 million employees in over 1,400 multi-employer pension plans. It is estimated that 1.5 million people are in jeopardy of their pension plans failing.
“The Central States Pension Fund, one of the nation’s largest multi-employer pension funds, has recently advised the US Treasury Department that unless Treasury would permit it to reduce retiree benefits (which the Treasury Department refused to do), it would have no choice but to seek financial assistance from the PBGC, putting an even greater strain on the financially troubled federal pension insurance fund.”
“In March of 2016, before any major failures or bankruptcies, the PBGC estimated that without a revenue increase of federal funding, there was a 42% chance of insolvency in 10 years and a whopping 93 % chance of insolvency in 20 years. This estimate is based on there not being a major multi-employer failure, which now seems not to be the case.”
It is another government agency that needs more money that we don’t have in this country. The sad part of the story is the retirees that might not get what is promised. Think about what faces this country. The Medicare and Social Security potential insolvency, 19 trillion dollars plus of debt, unfunded liabilities, borrowing money just to spend money, healthcare, pension problems, etc., the list is a long one.
What is the solution? Government wise I don’t know that there is one…at least not one that would fit with politics and crony capitalism.
However, if you have a pension and you are given the choice to take the pension or the lump sum, strongly consider the lump sum so that you can control your own retirement versus depending on the government bailing out your pension plan.