If you have a pension from a private company or a union, it is backed by a federal insurance program. Most people never need it. But it is worth knowing how it works, what it covers, and what to do if you have lost track of a pension from an old job.
What the PBGC is
The Pension Benefit Guaranty Corporation is a federal agency created in 1974. It insures traditional pensions, also called defined benefit plans, at private employers. It does not insure 401(k) plans, and it does not cover pensions for teachers, police officers or other state and local government workers. Those are backed by the states and cities that run them.
The PBGC is funded by premiums that pension plans pay, by the assets of plans it takes over, and by investment income. It pays benefits to well over a million retirees whose plans ended without enough money.
Single-employer plans
Most company pensions are single-employer plans. If one of these plans runs out of money, usually because the company went bankrupt, the PBGC takes it over and pays benefits up to a legal maximum.
That maximum depends on your age when payments start and the payment option you choose. For someone starting a single-life pension at 65, it is more than $7,400 a month. It is lower if you start earlier and higher if you start later. The limit rises every year with wages.
Most retirees are fully covered, because few pensions are that large. People most likely to lose part of their pension are high earners such as pilots and executives, and people who retire early.
Multiemployer (union) plans
Many union members, in trades such as construction, trucking, food service and entertainment, have a multiemployer plan funded by many employers under a union contract. The PBGC protects these plans too, but with a much lower guarantee, figured from your years of service:
- 100% of the first $11 of your monthly benefit for each year of service
- plus 75% of the next $33 for each year
So the most the PBGC guarantees is $35.75 a month for each year of service. With 30 years, that is $1,072.50 a month.
A few years ago, some large union plans were close to running out of money. In 2021, Congress created a special program that gave billions of dollars to those plans, which restored benefits that had been cut and secured payments for decades to come.
Signs your plan is in trouble
Your plan must send you an annual funding notice. Look for:
- A funded percentage well below 80%
- A plan described as “critical” or “endangered,” for union plans
- Notices about benefit freezes or cuts
If you see these, it may be a reason to think harder about any lump-sum offer. See lump sum or monthly payments.
How to find a lost pension
Many people earn a small pension at a job early in their career and forget about it. Companies merge, change names or move. Here is how to look:
- Check the Retirement Savings Lost and Found. The U.S. Department of Labor runs a free online search, started in late 2024, to help people find old workplace retirement plans.
- Search the PBGC’s unclaimed pensions list. If your old plan ended and was taken over by the PBGC, your name may be on it.
- Contact the old employer’s human resources office. Ask for the pension plan administrator.
- Look up the plan’s Form 5500. Every plan files this yearly report with the Department of Labor. It lists the plan administrator’s contact details.
- Check old paperwork. Your old pay stubs, offer letters and benefit statements can show the plan’s name.
You usually need at least five years of service at the company to be vested, though rules differ by plan and by year.
Questions people ask
Does the PBGC cover my 401(k)? No. A 401(k) is your own account. Its value goes up and down with your investments, and it is not insured by the PBGC.
Will I get paid on time if the PBGC takes over my plan? Yes. The PBGC keeps paying retirees without a break. People who have not retired yet can apply when they are eligible.
Is my government pension insured? Not by the PBGC. State and local pensions are backed by the state or city, and many state constitutions protect earned benefits. See our public pension plan pages.