articles from Employee Benefit Research Institute's site

a) EBRI's fact sheet on Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures the traditional pensions of about 44 million Americans is available at http://ebri.org/pdf/publications/facts/0107fact.pdf

b) for people with a slow intenet connection: a brief excerpt follows


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Basics of the Pension Benefit Guaranty Corporation (PBGC)
Overview
• The first U.S. private-sector pension plans were created in the late 1800s by the railroad industry.
While there were numerous pension plan failures over the years in various industries, the pivotal
event that led to comprehensive federal regulation was the 1963 collapse of the Studebaker Company,
the oldest major automaker in the nation. About 11,000 workers were affected by the termination of
Studebaker’s pension plans. The Studebaker case created strong political support for enactment of
the Employee Retirement Income Security Act of 1974 (ERISA), the major federal law that governs
private-sector retirement and health plans.
• ERISA established new requirements for private-sector defined benefit pension plans regarding
participation, funding, vesting, reporting, fiduciary duties, and financial disclosure. The law also
established the Pension Benefit Guaranty Corporation (PBGC) as a federal corporation.
• The PBGC currently guarantees payment of basic pension benefits for more than 44 million
American workers and retirees participating in more than 30,000 private-sector defined benefit
pension plans as of 2006. The agency receives no funds from general tax revenues. Operations are
financed largely by insurance premiums paid by companies that sponsor pension plans and by
PBGC's investment returns.
• PBGC has three principal missions:
o To encourage the continuation and maintenance of voluntary private pension plans for the benefit
of their participants.
o To provide for the timely and uninterrupted payment of pension benefits to participants and
beneficiaries under covered plans when bankruptcy occurs.
o To maintain premiums at the lowest level consistent with fulfilling its obligations.
• The program insures only private-sector defined benefit plans; it does not insure church or publicsector
pension plans, nor does it insure defined contribution plans (such as 401(k) plans).
• The program is designed to be self-financing. Revenue consists of premiums paid by plan sponsors,
assets acquired from terminated plans, recoveries from terminated sponsors, and earnings from
invested assets.
• PBGC’s liabilities are not explicitly backed by the full faith and credit of the federal government;
doing so would require a change in the law.
• The PBGC covers both single-employer and multiemployer pension plans. Multiemployer plans are
collectively bargained (union) plans to which more than one company makes contributions. As of the
end of fiscal year 2006 (Sept. 30, 2006), the single-employer program accounted for virtually all of
the PBGC’s deficit.
Single-Employer Program (SEP)
• PBGC SEP-insured participants and plans, year-end 2005:
o Total insured participants: 34.2 million.
o Total active insured participants: 16.6 million.
o Single-employer plans: 28,769.
• Financial position of the PBGC single-employer program as of Sept. 30, 2006:
o Total assets held: $61.1 billion.
o Present value of future benefits owed to covered workers and to “probable terminations”: $80.0
billion.
o Net fiscal position: a deficit of –$18.9 billion, including “probable terminations.”
o The single-employer program has operated in a negative net fiscal position throughout the history
of PBGC, except from 1996–2001. The largest pension default in PBGC history was the
termination of United Airlines’ plans in 2005, which were underfunded by an estimated $9.8 bil2
lion before adjustment for the level of PBGC guarantees (which are less than full benefit
promises) and for recovery that PBGC may gain should United emerge from bankruptcy and be
successful; the PBGC guaranteed about $5 billion of that amount. The largest previous U.S.
pension default was Bethlehem Steel’s $3.6 billion in underfunding in 2002.
• Insurance activity as of Sept. 30, 2006:
o Benefits paid to PBGC-covered single-employer pension participants: $4.1 billion.
o Total participants receiving or owed benefits: 1,271,000.
o Plans trusteed and planning trusteeship by PBGC: 3,673.
• Under the single-employer program, PBGC pays monthly retirement benefits up to a guaranteed
maximum. The maximum payments in plans with a termination year of 2007 for a single life annuity
are:
o At age 65: $4,125.00 a month (or $49,500 per year).
o At age 62: $3,258.75 a month (or $39,105 per year).
o At age 55: $1,856.251 a month (or $22,275 per year).
o Benefit increases and new benefits are only partially covered by PBGC's guarantee if they have
been in the plan less than five years on the date of plan termination. PBGC guarantees the larger
of 20 percent or $20 per month of the increase for each whole year since the benefit increase.
Participants may receive the full benefit increase if the increase has been in the plan more than
five years. Generally, benefit increases occurring within one year of plan termination are not
guaranteed.
Multiemployer Program (MEP)
• PBGC MEP insures multiemployer plans, defined as collectively bargained pension arrangements
involving unrelated employers, usually in a common industry, such as construction, trucking, textiles,
or coal mining.
• Under the multiemployer program, PBGC provides financial assistance through loans to plans that are
insolvent (that is, plans that are unable to pay basic PBGC-guaranteed benefits when due). Before a
plan receives financial assistance from PBGC, it must suspend payment of all benefits in excess of the
guarantee level.
• PBGC MEP-insured participants and plans, year-end 2005:
o Total insured participants: 9.9 million.
o Active insured participants: 4.6 million.
o Multiemployer plans: 1,567.
• Financial position of the multiemployer program as of end of fiscal year 2006, ending Sept. 30, 2006:
o Total assets held by the multiemployer program: $1.2 billion.
o Present value of future benefits: $1.9 billion.
o Nonrecoverable future financial assistance (PBGC assistance to insolvent MEP plans, technically
considered a loan but unlikely to be repaid), present value: $1.9 billion.
o Net fiscal position of the multiemployer program: a deficit of –$739 million.
• Insurance activity as of end of fiscal year 2006, ending Sept. 30, 2006:
o Benefits paid: $1 million.
o Number of multiemployer participants receiving benefits from the PBGC: 240.
o Plans trusteed and planning trusteeship by PBGC: 33.
• The Consolidated Appropriations Act of 2001, signed into law on Dec. 21, 2000, increased the
benefit guarantee in multiemployer plans to the product of a participant’s years of service multiplied
by the sum of (1) 100 percent of the first $11 of the monthly benefit accrual rate and (2) 75 percent of
the next $33 of the accrual rate. For someone with 30 years of service, this raised the guaranteed limit
to $12,870.
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For More Information
• PBGC Web sites and documents:
o PBGC Web site: www.pbgc.gov/
o PBGC annual reports: Most recent is for 2006, www.pbgc.gov/about/annreports.html
o PBGC Pension Insurance Databook (most recent is 2005): www.pbgc.gov/practitioners/plantrends-
and-statistics/content/page13270.html
o PBGC Fact Sheets: http://www.pbgc.gov/media/key-resour...page13542.html
• U.S. General Accountability Office (GAO):
o Pension Benefit Guaranty Corporation: Structural Problems Limit Agency’s Ability to Protect
Itself From Risk, Statement of David M. Walker, Comptroller General of the United States,
Testimony before the Subcommittee on Government Management, Finance and Accountability,
Committee on Government Reform, House of Representatives, March 2, 2005 (GAO-05-360T),
www.gao.gov/new.items/d05360t.pdf
o Current and Emerging Challenges in Retirement Security (PowerPoint presentation by David M.
Walker, Comptroller General of the United States, Dec. 13, 2004. Slide 28: “Several Reforms
Might Improve Plan Funding and Reduce the Risks to PBGC's Long-term Viability.”
http://www.gao.gov/cghome/aicpaben20...en20041204.pdf
Sources: Pension Benefit Guaranty Corporation, 2006 Annual Report (Washington, DC: Pension Benefit Guaranty
Corporation, 2006), www.pbgc.gov/about/annreports.html; 2005 Pension Insurance Fact Book (Washington, DC:
Pension Benefit Guaranty Corporation, 2006) http://www.pbgc.gov/docs/2005databook.pdf ; and PBGC Fact
Sheets, http://www.pbgc.gov/media/key-resour...page13542.html
FS-197 January 2007

a good article highlighting today's trends ie
'Employment Status of Workers Age 55 and Older,' and 'Assets in Qualified Retirement Plans, 1985–2005: Updated'
is available at
http://www.ebri.org/publications/not...ontent_id=3839

b) a brief summary for people with slow internet connection follows

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"Employment Status of Workers Ages 55 or Older"



• More older workers in the labor force: An increasing percentage of older Americans are in the labor force: Those ages 55 or older in the labor force increased from about 29 percent in 1993 to 38 percent in 2006. For those ages 65–69, the percentage increased from about 18 percent in 1985 to 29 percent in 2006.



• More full time, less part time: Not only are members of the older population more likely to work, they are more likely to be working full time, full year. The trend toward more full-time, full-year work among older workers occurs across virtually every demographic category.



• Need for health, retirement coverage likely factors: These trends mark a significant change in behavior for individuals in these age groups, and are likely driven by their need to obtain affordable employment-based health insurance (as opposed to unaffordable or unavailable coverage in the individual market) and the need to continue to accumulate savings in employment-based defined contribution retirement plans.



• Trends likely to continue: Both trends of increased labor force participation and increased full-time, full-year work are likely to continue, since private-sector employers have been phasing out retiree health insurance for younger workers and are continuing to shift out of defined benefit pensions and into defined contribution retirement plans.



"Assets in Qualified Retirement Plans, 1985–2005: Updated"



• Retirement assets growing: As of year-end 2005, total assets in tax-qualified U.S. retirement income plans (both defined benefit and defined contribution) amounted to $14.388 trillion. By 2005, qualified retirement plans had recovered from the losses experienced since 2002, when total assets amounted to $10.139 trillion.



• IRAs biggest component: In 2005, individual retirement accounts (IRAs) represented the largest component of total U.S. retirement assets (25.5 percent), followed by private defined contribution plans (21 percent), state and local governments (19 percent), private defined benefit pensions (15 percent), private insured (12 percent), and the federal government (7.5 percent).

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