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PBGC (the Pension Benefit Guaranty Corporation) is an independent agency created by Congress in 1974 to protect the pension benefits of workers and retirees. It guarantees payment of basic monthly retirement income to participants who are covered under a defined benefit plan if their employer goes bankrupt, as well as certain other payments such as death or disability pensions. It also provides protection against loss of coverage for those with less than 20 years service before the termination date because they were laid off, discharged, or otherwise separated from employment.

Since its creation, the PBGC has assisted 1,500 companies and guaranteed more than 1 million workers' pensions. In total, it has paid benefits to 2.4 million retirees in over 80,000 terminated plans. So it's clear that PBGC has often been able to pay promised benefits when corporations failed to do so, with the funds coming from premiums and investments.

This is all very reassuring for current workers covered by a company plan with stable sponsors (most of whom are large companies). But what about future retirees, who may have been counting on PBGC to take over their plan when the company failed?

Unfortunately, in November 2014—for the first time in its history—PBGC's guarantee of benefits for multi-employer plans fell below $1 billion. And this was not because companies had failed, but rather because employers withdrew more than $50 billion in assets from their plans. So it's clear that PBGC has often been able to pay promised benefits when corporations failed to do so, with the funds coming from premiums and investments.

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