How Much You Will Get if Your Pension Fails

If your company pension plan fails, you won’t necessarily end up without any retirement income. Most traditional pension plans, but not 401(k)s, are insured by the Pension Benefit Guaranty Corporation up to certain annual limits. The maximum annual guarantee for a 65-year-old retiree whose pension plan ends in 2013 will be $57,477.24, up from $55,840.92 in 2012.

The PBGC assumes responsibility for a traditional pension plan when the plan runs out of money, the company liquidates, or the firm goes out of business. For example, this year the PBGC assumed responsibility for the retirement benefits for nearly 1,300 current and former employees of SP Newsprint Co., a newsprint producer in Greenwich, Conn. The company had only $74.4 million in assets to cover $150.7 million in benefits, and the PBGC now expects to pay for $73 million of the shortfall. “The guts of this agency is trying to maintain retirement security,” says PBGC Director Josh Gotbaum. “The way that we do it is by taking people’s worries away, and that’s what we are trying to do here. “
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