The news isn't good for 1.5 million people across the country in a swath of multiemployer plans. According to PBGC's Projections Report, released last week, these plans are likely to fail putting the retirement benefits of current and future employees in jeopardy. Not only that, but if those plans fail it may bring down the entire system and with it the retirement security of the 10 million people within it.
Right now, there are more than 10 million people and their families covered by about 1,400 multiemployer plans in industries like construction, mining, supermarkets, transportation, and hospitality. Massive losses during the economic slowdown in 2008-2009, left many plans seriously underfunded. The economy has improved significantly, but for the plans most in trouble, the improved economy was not enough. These plans responded by increasing contributions and reducing future benefits but it still wasn't enough.
PBGC will pay retirement benefits for more than 1,400 current and future retirees of Interfaith Medical Center, which operates a 287-bed hospital in Brooklyn, N.Y.
The agency stepped in because Interfaith Medical is unable to meet the minimum funding requirements for the two pension plans it sponsors.
PBGC will pay all pension benefits earned by Interfaith Medical's retirees up to the legal limit of about $55,840 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.
The best time to start thinking about and saving for retirement is always right now.
While that's true for everyone, recently there's been a steady flow of stories about twenty and thirty-somethings to get them ready for life after work.
That's because the estimates for how much a 20-year-old needs to save go as high as $7 million.
For some, the enormity of the task has paralyzed them into inaction, while others view themselves as highly disciplined money managers - a trait discussed in a recent report by Time.
There are many in the financial planning community who advise starting a savings plan with at least 10 percent of your yearly income. But for a generation with competing financial concerns like rent, car payments, and student loans, it's too easy not to save now for a need that's decades away.
In the recently published article "Thought Secure, Pooled Pensions Teeter and Fall," New York Times reporter Mary Williams Walsh gets candid commentary from PBGC Director Josh Gotbaum on the crisis facing the multiemployer pension system.
Gotbaum was quoted saying, "If Congress allows the PBGC to get the money and the authority it needs to do its job, then these plans can be preserved," he added. "If not, the PBGC will run out of money, too, and multiemployer pensioners will get virtually nothing. This is not something that can wait a few years. If people kick the can down the road, they'll find it went off a cliff."
Read the full article and find out more about multiemployer pension plans.
Created in 2004 by the International Foundation of Employee Benefit Plans (IFEBP), National Employee Benefits Day is nationally recognized on April 2.
According to the Employee Benefits Research Institute, almost nine in ten people don't think they'll have enough saved when they get to retirement. Study after study provides data pointing to the same conclusion: A crisis is coming. Are you prepared for it?
This year, the focus of National Employee Benefits Day is to increase awareness of the retirement crisis and to help plan sponsors motivate participants to actively engage in their financial wellness.
PBGC is always on the quest for finding new ways to make retirement security a hopeful reality for most Americans. Just yesterday, we announced a proposal that makes it easier for participants in 401(k) plans to get higher returns and get lifetime income — by moving their funds into traditional pensions.
To help make financial wellness more urgent for plan participants, the International Foundation of Employee Benefit Plans has created a number of resources that provide simple tools to get them thinking about their future.
Get started with IFEBP's helpful handouts that explain key terms for: Retirement Plans [PDF], Investments [PDF] and Credit [PDF].
Content in this blog entry was obtained from the International Foundation of Employee Benefit Plans website.
Did you recently receive an Annual Funding Notice? Wondering what it means?
Annual Funding Notices keep you (pension plan participants) informed about the financial status of your pension plan.
Now, you're probably wondering why you received the letter. The answer is simple. You received the letter because employers are required to send an Annual Funding Notice each year to everyone covered by their pension plan.
The notice provides you with information about:
- How well your pension plan is funded
- The value of your pension plan's assets and liabilities
- How your pension plan's assets are invested
- The legal limits on how much PBGC can pay if your pension plan ends
The bottom line is there is no need to panic. The notice does not mean that your pension plan is ending or that PBGC is taking over payment of your benefit. While PBGC insures your pension, the pension plan remains under the sponsorship of your employer. PBGC does not have any specific information about your benefit.
For questions about your funding notice, pension plan, or individual benefit, please contact your pension plan administrator, not PBGC. PBGC only has information about pension plans that have ended. You can find contact information for the pension plan administrator in the annual funding notice or through the employer sponsoring the plan, typically via the human resources office.
Additional information is available on our Annual Funding Notice for Defined Benefit Pension Plans page.