What if your company folds before you retire?
Don't assume the worst. "A bankruptcy doesn't mean a pension plan automatically comes to PBGC," says J. Jioni Palmer, senior adviser and director of public affairs at the Pension Benefit Guaranty Corp., which sometimes takes over plans. "We work with businesses to help them keep their plans going," says Palmer.
Attorney Jeffrey R. Capwell, practice group leader for the employee benefits group at McGuireWoods law firm, says the PBGC doesn't just work with employers -- it pushes, shoves and insists that a bankrupt firm meet its pension obligations.
Defined benefit pension plans are a cash drain, which is why companies facing bankruptcy are inclined to turn them over to the PBGC. But because of the PBGC's aggressive approach, Capwell says that if the company is sold or reorganized, the plan will remain in place and viable.
"The PBGC has a whole arsenal of legal powers and tactics available to it, and it gets actively involved with companies when they are in an early warning stage before they declare bankruptcy. This is an agency that is very active in monitoring plans. It isn't an agency that wants to be in the business of assuming plans," Capwell says.