Personal Finance & Estate › IRS, SSA, CMS & other agencies › U.S. Dept. of Labor, Employee Benefits Security Admin.
Pension Benefit Guaranty Corporation (PBGC)
Since 1974· Agency
Law or rule (2026)Set by statute, regulation or the agency; numbers change yearly.
The federal insurer of private-sector pensions, which takes over and keeps paying when an underfunded plan's sponsor fails.
See it on the Personal Finance & Estate map →How it works
The PBGC, a federal corporation created by ERISA in 1974, insures private-sector defined-benefit pensions for about 31 million people. If a sponsor fails with an underfunded plan, PBGC takes it over and pays benefits up to legal limits: about $93,000 a year for a 65-year-old in a single-employer plan in 2026, less at younger ages, far less in multiemployer union plans. It is funded by employer premiums and failed plans' assets, not taxes. It doesn't cover 401(k)s or government pensions.
Why it matters for you
It is why most private pensions survive an employer's bankruptcy; high earners and early retirees in failed plans can still lose part of their promised benefit.
Rules, limits and sources (2026)
PBGC annual reports show it is responsible for pensions of about 1.5 million people in failed plans; the 2021 American Rescue Plan funded roughly $70 billion to rescue struggling multiemployer plans.
Watch out for
Its single-employer fund has shown a surplus since 2018, but long-term risk remains in multiemployer plans whose rescue money is meant to last only through 2051.
Connections (3)
▸Pension Benefit Guaranty Corporation (PBGC) works alongside U.S. Dept. of Labor, Employee Benefits Security Admin.Law or rule (2026)
How they connect
Both were born of ERISA. EBSA enforces the rules for running pensions and other plans, while the PBGC insures defined-benefit pensions if they fail. The Labor Secretary chairs PBGC's board, with the Treasury and Commerce secretaries, and the annual Form 5500 filing feeds both agencies' oversight.
When it applies
Both trace to ERISA, signed on Labor Day 1974; PBGC began insuring pensions that year as a federal corporation.
The rule
ERISA Title IV creates the PBGC with the Labor Secretary as board chair; Form 5500 is a joint Labor-IRS-PBGC filing.
Watch out for
Whether PBGC premiums and funding rules are too heavy, pushing employers to freeze or drop pensions, or too light to protect workers, is debated.
▸Defined-benefit pension is insured by Pension Benefit Guaranty Corporation (PBGC)Law or rule (2026)
How they connect
A private employer's pension promise is only as good as the plan's funding and the company behind it. The PBGC backstops it: if a sponsor goes bankrupt with too little in the plan, PBGC takes over and keeps paying, up to its legal maximum. Government pensions like CalPERS are not covered; they rely on the state.
When it applies
PBGC began in 1974, after Studebaker's 1963 closing left workers with little; major takeovers followed, including Bethlehem Steel in 2002–03 and United Airlines in 2005.
The rule
PBGC lists each terminated plan, its participants and benefits paid; ERISA Title IV sets the guarantee formula.
Watch out for
Whether to take a lump sum, avoiding reliance on PBGC, or keep insured lifetime checks depends on health, interest rates and the sponsor's strength.
▸Pension Benefit Guaranty Corporation (PBGC) also insures Cash-balance planLaw or rule (2026)
How they connect
Because a cash-balance plan is legally a defined-benefit pension, the PBGC insures its benefits up to legal limits, and the employer pays yearly PBGC premiums. Exceptions: professional firms (doctors, lawyers) with 25 or fewer participants, and plans covering only owners, are exempt from coverage.
When it applies
PBGC coverage comes from ERISA Title IV (1974); plan sponsors pay premiums every year.
The rule
ERISA Sec. 4021 lists covered plans and exemptions; the PBGC publishes premium rates and maximum guarantees each year.
Watch out for
Whether a small firm's plan is covered can turn on headcount and profession; the actuary and an ERISA attorney make the call.