Alert
Close

Last Chance: Top the Treasure Hunt leaderboard by 5 p.m. today to win a $100 gift card! Learn more

Highlights

Open

most popular
ARTICLES

Viewed

work
PROGRAMS

Best Employers for Workers Over 50

See the latest winners of this AARP recognition program.

Employer Resource Center

Attract and retain top talent in a changing workforce.

Retirement Benefits and the Bankrupt Employer

When a business fails, its pension plan and retiree health benefits may come up short as well.

If your former employer goes bankrupt, it could affect two important benefits that you might have: defined benefit pension plan benefits and retiree health benefits.

Pension Plan

Are you currently receiving (or expecting to receive) monthly pension payments from your former employer from?  ____ Yes ____ No  (If no, skip to the retiree health section.)

If yes, you need to find out if your employer is going to continue making those payments (contact the HR department) or if the pension obligation will be taken over by the Pension Benefit Guaranty Corporation (PBGC).

The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in 30,000 private single-employer and multiemployer defined benefit pension plans. The PBGC only becomes involved if a terminated pension plan does not have sufficient assets to cover all vested benefits.

Generally, the PBGC guarantees most vested normal retirement benefits, early retirement benefits and certain survivors' benefits at the level in effect on the date of a pension plan's termination. However, the PBGC does not guarantee all types of benefits under covered plans. Also, the amount of benefit protection is subject to certain limitations so you might receive a monthly payment that is less than what you’re currently receiving.

If you want more information, contact:

Office of Communications PBGC
1200 K Street, NW
Washington, DC 20005
Telephone: (202) 326-4000
www.pbgc.gov

Retiree Health Benefits

Are you receiving retiree health benefits from your former employer? (The premium might be paid by the employer, by you, or shared by both). _____Yes   ______ No

Your retiree health benefits may be terminated through bankruptcy court. ERISA law protects pensions, but not retiree health benefits, against corporate bankruptcy. If your retiree health benefits are terminated, you need to find out what other health coverage is available to you as soon as possible.

If you are 65 or over, you are covered by Medicare. You should considering purchasing Medicare supplemental insurance to help you pay for prescriptions and expenses not covered under Medicare. For more information, visit the Medicare & Insurance subchannel at AARP.org.

If you are under age 65, you are not yet covered by Medicare. 

 

Source:  PBGC, Foundation for Health Coverage Education

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS

Members get 15% off eligible products/services and 5% off shipping at The UPS Store®.

AARP Discounts on Consumer Cellular Phones and Plans

Members save 5% on monthly service and usage charges with Consumer Cellular.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Explore Your Learning Possiblities