If you are one of the lucky people who are entitled to an old-fashioned defined benefit pension, you can feel encouraged that the likelihood that you'll get the retirement benefits that are owed you is improving.
The typical U.S. corporate pension plan was 88.5 percent funded in March, according to statistics published by BNY Mellon Asset Management. This was the seventh straight month that the funding ratio has improved. Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Higher yields mean lower liabilities.
"We are ever so close to the 90 percent funded-status milestone, which was last achieved in October 2008," said Peter Austin, executive director of BNY Mellon Pension Services in a statement.
Meanwhile, the obligations of a significant number of pension plans continue to be assumed by the U.S. government's Pension Benefit Guaranty Corp. The PBGC guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in more than 27,500 private-sector defined benefit pension plans. Last year the PBGC worked with debtors and creditors in more than 30 corporate bankruptcies to keep pension plans afloat. In the first quarter of 2011, it worked with another nine bankrupt firms to keep their plans solvent.
If you were employed by a company that went bankrupt in the last 20 years, chances are the PBGC took over the pension obligations. You can search for yourself by name on the PBGC's website to find whether you might be entitled to some pension benefits. The PBGC says that 85 percent of employees whose pensions were less than $36,000 per year receive all of their benefits when it takes over a plan. If you were entitled to a larger pension, you may get only a portion of what you were owed.
While being entitled to a conventional pension is a wonderful thing, unfortunately in this economy, actually getting the money isn't a retirement planning certainty.