Monday, August 12, 2013
PBGC publishes reminder that it does not insure public pension plans; filial responsibility could come into play after bankruptcies
The Pension Benefit Guaranty Corporation (PBCG) has reminded the public that it doesn’t insure the pension plans of governments – municipal, county, or state. It only backs up the pensions of (most) private-sector plans. The posting is here.
The question began to circulate Sunday night after a television broadcast by Morgan Spurlock about a municipal bankruptcy (in his “Inside Man” series) mentioned that the pension payments of one California town (not Stockton, but a smaller town) had been cut by 90% by the bankruptcy court. That means the pensioners have been stiffed and are out of luck for life. That is obviously a big upcoming issue in Detroit. Here’s another potential complication. California, like many states (I’m not sure about Michigan) has a filial responsibility law. It’s possible that when a parent who had beenan affected municipal employee loses most of his or her pension, an adult child could be forced to support him or her.
By the way, the AARP map (linked on this blog March 8) seems to have disappeared. I’ll try to find out where it is. AARP does have a text article on the filial responsibility issue here. It is by Beth Baker and dates back to January 2009.