Pension Benefit Guaranty Corporation (PMGC) is a pension corporation group that was chartered by the Federal Government and one that was created by the Employee Retirement Income Security Act of 1974 to encourage people to voluntarily contribute to private defined benefit pension plans, maintain them and ensure that they are providing timely and uninterrupted payments for these pension benefits. This is basically an independent agency in the US government and its main mandate is to provide an insurance support to the private pension as well as other benefit plans. They also ensure that insurance premiums are always at the lowest level.
Pension benefits guarantee fund insurance program makes certain that its beneficiaries are enjoying the maximum guaranteed benefits as set by the law, and these are retirees from the age of 65. PMGC is not funded by the taxpayer money and majority of its funding comes from the insurance premiums that are charged to members. The agency also receives revenue from investment returns and the assets it takes over in the event of failure.
According to the PBGC’s 2016 annual report, the agency has been able to achieve the following:
What is important to note is that PBGC retirement is taking its mandate seriously and many people in these retiree benefit plans are assured of enjoying their retirement savings with no issues such as little or no savings, low payouts and consequently low currency flow through the economy.
It is also important to note that PBGC does not cover the government pension insurance including those organized by the state, federal and local government. The public pension funds are covered by taxpayer money, bonds, and investment returns. In the event that a state or municipality is not able to meet its pension obligations and is also not able to raise taxpayer money to compensate for that, major issues could arise.
Employees who fully rely on public pensions could face major problems because these plans are not the best there are today. If therefore you are a member of a public pension, it is important to try protecting yourself as much as you can by saving outside your pension.
The US pension benefit guaranty corporation is a great way to protect one’s pension benefits especially for those in private-sector defined plans. The agency may not guarantee 100% coverage for all deposits you have deposited but it sets annual maximums of what it will pay out to its pensioners. If therefore you have a private pension plan and are not sure if you are covered by PBGC health insurance, search it on PBGC company search tool
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