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PBGC Blog: Retirement Matters

Like the old saying goes "if you don't use it, you lose it." A study of nearly half a million people in France revealed that people who delay retirement have less risk of developing Alzheimer's disease or other types of dementia.

Read the full Associated Press article on the USAToday website

The Wall Street Journal CFO Network Annual Meeting 2013 wrapped up last month. PBGC Director Josh Gotbaum participated in an interview session titled "The Great American Pension Crisis: Funding Past Promises and Future Retirement."

In his interview with Gabriella Stern, Deputy Managing Editor, WSJ Digital Network, Director Gotbaum focused on how U.S. companies will tackle mounting pension obligations in the coming years.

Dallas Salisbury, President and CEO, Employee Benefit Research Institute, also offered perspectives.

Take a look at the Dow Jones video recording of the interview. NOTE: The video may take a minute or two to fully load.

PBGC will pay benefits for nearly 470 current and future retirees of Butzel Long, a law firm based in Detroit, Mich.

The agency stepped in because the firm would be unable to maintain its pension plan and remain in business.

PBGC will pay all pension benefits earned by the law firm's retirees up to the legal limit of almost $57,500 a year for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

Recent media reports have suggested that Butzel Long's plan was short by at least $10 million, but that estimate assumed the plan was ongoing. At PBGC, we measure funding on a termination basis, which often reveals a much higher shortfall.

According to our estimates, as of March 20, 2013 (the plan termination date), the pension plan was 47 percent funded with $34 million in assets to pay $73 million in benefits. The agency expects to cover most of the $39 million shortfall.

PBGC can provide general information now and will be able to answer more detailed questions once we receive the pension plan's records. Participants in Butzel Long's plan will be notified by letter after the transfer occurs.

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PBGC insures traditional pensions. So for years, we told people that we had nothing to do with defined contribution plans, such as 401(k)s.

But we're also interested in the retirement security of all Americans. That's why we're considering a program that would deal with the benefits of missing participants in terminated defined contribution plans.

We're looking for feedback from participants, employers, and retirement experts on the value of developing such a program. We need input on the scope of the problem of missing participants and the need for PBGC to take in the benefits and look for people.

Also, we want to understand the value of a database where people can search for their benefits, and the impact that a PBGC program might have on private companies that perform similar services.

According to the Department of Labor, in 2010, the most recent year available, there were more than 650,000 defined contribution plans with 88 million people.  That same year, about 29,000 defined contribution plans, covering some 1.2 million people, terminated.

This effort would expand our finding an unclaimed pension search on the agency's website, where visitors can see if they're owed a traditional pension benefit from one of the failed plans PBGC assumed.

To make good decisions, and before we act, we're inviting the public to weigh in. You can submit your comments through reg.comments@pbgc.gov.

PBGC will pay benefits for 27 current and future retirees of Wrightco Technologies Inc., a for-profit educational center located in Ebensburg, Pa.

The agency stepped in because Wrightco's pension plan is unable to pay retirement benefits.

PBGC will pay all pension benefits earned by the company's retirees up to the legal limit of almost $56,000 a year for a 65-year-old.

The Wrightco Technologies Inc. Cash Balance Plan will end as of June 28, 2013.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

PBGC can provide general information now and will be able to answer more detailed questions once we receive the pension plan's records. Participants in Wrightco's plan will be notified by letter after the transfer occurs.

For additional information, please email us at mypension@pbgc.gov or call 1-800-400-7242 (8 a.m. to 7 p.m. EST, Monday - Friday) (TTY/ASCII: call 1-800-877-8339 and ask to be connected to 1-800-400-7242).

Wrightco was founded in 1989 and provides high-tech training in areas such as fiber optics and data communications. After several years of poor financial performance, the company sought Chapter 11 protection in the U.S. Bankruptcy Court in Johnstown, Pa., on July 18, 2012.

NIRS: The retirement savings crisisA new study answers whether the retirement crisis is worse than we thought. The research report concludes that when all working-age families are counted, the typical family has only a few thousand dollars saved for retirement.

The study reveals:

  • The typical working-age household has only $3,000 in retirement account assets; the typical near-retirement household has only $12,000.
  • Four out of five working families have retirement savings less than one times their annual income.
  • The U.S. retirement savings deficit is between $6.8 and $14.0 trillion, depending on the household assets counted.

These findings are contained in a new research report, The Retirement Savings Crisis: Is it Worse Than We Think?, issued by the National Institute on Retirement Security (NIRS).

Read the full study on the NIRS website.