Monday, February 27, 2006

Private Defined Benefit Pension Stability

The first major topic for many early retirees is the stability of their pensions.

Most defined benefit pensions are single life annuities (they terminate at the death of the employee) or single life with survivorship (which pays out beneficiaries but results in a lower pension) or sometimes with survivorship with period certain (often five years).

The most critical topic for many retires is the stability of their former employers. A large amount of protection for pensions still exists with the Pension Benefit Guaranty Corporation, but there are long term concerns about its solvency. If your company goes bankrupt or gets into financial difficulty, it might terminate your plan, in which case the PBGC would cover part of your pension.

Reference:

http://www.dol.gov/ebsa/faqs/faq_consumer_pension.html

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