How Safe is Your Pension?
If you are fortunate enough to be entitled to a pension, you may wonder just how safe that pension really is. The odds are that it is pretty safe because defined benefit plans can't be touched by a company's creditors if the company encounters rough financial times. However, if the pension is not "fully funded", payments to some employees may be in jeopardy.
To be more specific, if a pension plan is terminated and it doesn't have sufficient assets to pay all of the promised benefits, the Pension Benefit Guaranty Corporation (PBGC) will step in to protect the benefits. That is the good news. The bad news is that the PBGC only protects pensions up to a certain dollar amount. If your pension payment exceeds the maximum protected by the PBGC, you will likely lose some of your benefits.
In 2009, the maximum amount that will be insured by the PBGC is $4,500 per month. If your pension exceeds $54,000, you could be in danger. And, it is important to note that this maximum amount is only available to retirees who are age 65 or older. If you are younger than 65, your maximum amount would be lower.
