The pension benefit guaranty is something that all people should consider getting. It is a plan that gives people benefits in the unlikely even that their employer sponsored benefit plan becomes null in void.
The plan gives people basic benefits once they have received retirement age. They will receive a pension, annuities for survivors of plan participants, some early retirement benefits, and they may receive disability payments. Those who retire early will have a reduction of benefits while those who retire after 65 will have more benefits given to them.
There are two types of plans in the pension benefit guaranty. They are: multi employer and single employer plans. The multi employer one means that more than one employer has to contribute and the single employer one means that it is maintained by one employer.
As far as how the plan is funded, it is funded by premiums from sponsors, earnings from invested assets, recoveries in bankruptcy from former plan sponsors, and assets from defined benefit plans. The rates are adjusted for national average wages and cost of living.
If you are not sure if you are covered by the benefit plan, you should check your plan’s description. If it is, you will see a reference on pension benefit guaranty. Your plan administrator or employer should also be able to tell you if your plan is covered. To find out what the health of your plan is, check to see if you got anything in the mail. Single employer plans are supposed to give you notification if your plan has been less than 80% of its working function for the past one to two years. They are also supposed to let you know if it has been functioning less than 90% for two years.
So as you can see, getting a pension benefit guaranty plan can be a good thing especially if you are dropped from your employer’s plan.