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PBGC Blog: Retirement Matters

This entry is part of a series of blog posts that looks back and commemorates the agency's work.

Early Program Warning cartoon. A tailor with PBGC on his shirt tells his customer 'A nip here... a tuck there.. and we'll be all set!' His customer has a suit jacket with 'Early Warning Program' written on it.

The Landscapes Shift

The intensity of our work began to widen and deepen, calling upon us to use our creative, financial and legal skills to find new ways to alleviate a sudden rash of pension jettisoning. At the same time, we significantly improved protection for people with traditional pensions, and we expanded and strengthened our customer service platform.

The decade started with a pleasant, familiar result: The U.S. Supreme Court issues an 8-1 decision in the LTV case affirming PBGC's broad authority to address abuses of the federal pension insurance system.

It helped fortify us for a decade of determined destinations that improved our service and fortitude.

For example, as 1990 ended we established the "Early Warning Program" to work with plan sponsors to reduce risk and prevent losses to plan participants and the insurance program as a consequence of corporate transactions. That program paid off in May 1994 when we negotiated a $10 billion pension contribution from General Motors — the largest single contribution ever made to a PBGC-insured pension plan.

The next year, 1995, the John F. Kennedy School of Government and Ford Foundation presented us with the Innovations in Government Award for that Early Warning Program. This award recognizes innovative government solutions in response to social or economic problems.

It was not the only new, important idea we implemented and that succeeded.

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This entry is part of a series of blog posts that looks back and commemorates the agency's work.

PBGC 40th Anniversary Logo

Setting the foundation

What a way to start a decade: Standing in front of the Supreme Court. Yet that is how we began the 1980s, seven days into the year, arguing — and winning — a major decision that upheld the constitutionality of employer liability.

We won a big decision in a battle that was part of a wider, tougher war — and a war where those seeking pensions were losing ground. It was the decade when pension plans sharply turned to become programs at risk.

The decade started with 35.9 million private-sector workers (46 percent of all private-sector workers) being covered by a pension plan. As of Sept. 30, 1980, we were responsible for about 50,000 people.

That decade saw our assets grow along with our responsibilities. We went from being responsible for about 50,000 people to more than 250,000 people. Our assets exceeded $1 billion for the first time.

And the firsts continued.

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This entry is part of a series of blog posts that looks back and commemorates the agency's work.

Photo of President Ford signing ERISA bill

We hit the "Door" running

We had no time to hang photos, adjust chairs or figure out how to dial long distance. Visualize the rush on department store doors on Black Friday — well, that was much like what greeted us when we opened our doors for the first time in Silver Spring, Md., in 1974.

More than 200 urgent cases waited for us before the first pot of coffee was brewed.

Two days later our Board met for the first time and 21 days later we mailed our first premium forms. And it has not slowed since.

Initial annual premiums were $1 per plan participant in the single-employer program and 50 cents per participant in the multiemployer program. Thus began our march together with workers and employers seeking to preserve pension security for hard-working Americans.

When President Ford signed the Employee Retirement Income Security Act (ERISA) on Sept. 2, 1974, which included creation of PBGC, he gave us our charge: "Today, with great pleasure, I am signing into law a landmark measure that may finally give the American worker solid protection in his pension plan," Ford said.

"May" is the word we looked at hard and carefully. In a sense, we want to make the impact of that word as minimal as possible and — ideally — change "may" to "will."

We are not there yet.

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In a recent Pension and Investments opinion column, former PBGC executive director Bradley Belt addressed what needs to happen to keep PBGC from a federal bailout. Belt cited PBGC's Projections Report, which notes the improved condition of the single-employer program. However, the multiemployer program has "deteriorated alarmingly," Belt said.

A federal bailout is avoidable, according to Belt, provided three changes are made to current law: An overhaul to the premium structure, a change in the agency's governance, and a greater ability to determine financial solutions.

Disclaimer: This column does not necessarily represent the views of PBGC or any of its executive leaders and managers.

We recently created an online resource that provides information to assist with "Making a Choice: Lump Sum or Annuity?"

Many people with a retirement plan face the decision of choosing between an annuity and a lump sum payment to fund their day-to-day life after they stop working. An annuity provides a lifetime steady stream of income whereas a lump sum is a one-time payment.

The new resource page allows you to get some insight on key questions (click on the question for the answer) that should be answered when making this important decision and offers other hypothetical scenarios you may face.

You can also share this new page on our site by using the share icons at the bottom.

PBGC will pay retirement benefits for 2,101 people covered by the APL/NVF Consolidated Pension Plan, which is sponsored by the estate of businessman Victor Posner. The estate has interests in about 40 entities that mostly focus on real estate development in Florida, Pennsylvania, and Maryland.

The agency is stepping in because the assets of the Posner estate are being distributed by a Florida Probate Court, and the pension plan will be abandoned. The APL/NVF Consolidated Pension Plan will end as of July 31, 2014.

PBGC will pay all pension benefits earned by the plan's retirees up to the legal limit of about $59,320 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.

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