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<p>[quote user="blue streak 1"]</p> <p>[quote user="schlimm"]</p> <p>The PBGC is a federal agency according  to its website.  What the airlines did is legal, but it did dump much of the net burden of paying the pensions they had provided to employees onto that agency, prior insurance premiums paid in notwithstanding. [/quote]</p> <div style="clear:both;"> </div> <div style="clear:both;"><strong>Personal experience.   --   PBGC only got 25 - 30 % of amount they pay out and that value is only about 1 /4 that was in defined benefits plan.  The PBGC subsidy from the federal budget is some amount not know by this poster.  Wonder what multiple it is of the federal Amtrak payment ? </strong>[/quote]</div> <div style="clear:both;"></div> <div style="clear:both;"> <p>"PBGC is funded by assets from trusteed plans and premiums from plan sponsors, not by taxpayer dollars. Unfortunately, our premiums are set in law. <img src="http://www.pbgc.gov/images/ar/2013/g2-small.png" alt="Graph titled, PBGC's Premiums Don't Cover The Benefits We Pay, showing (in terms of billions of dollars) the amount of benefits paid versus the amout of premiums collected between 1997 and 2013. In 1997, premiums collected exceeded benefits paid; in 1999, the two were equal, and since 1999, benefits paid have exceeded premiums collected." class="fright" />They’re both too inflexible — so that some plans are unfairly paying for the risks of others — and too low to cover PBGC’s benefit guarantee levels.</p> <p>In 2003, the Government Accountability Office added PBGC to its “High Risk” list of agencies, because we control neither the benefits we pay nor the premiums we charge. Congress has repeatedly raised PBGC’s premiums, but they remain too low to fund our obligations. That’s why, 10 years later, we remain on GAO’s High Risk List."</p> <p>Because premiums out stripped benefits during the initial years of the PBGC, it has sufficient assets to meet the needs of its beneficiaries for the next 10 to 15 years.  If the Congress does not allow it to set its premium scale to cover its actuarial liabilities, it will run out of money after that.  </p> <p>Interestingly, the accumulated deficits for the PBGC and Amtrak are in the neighborhood of $30 billion. But the PBGC has generated sufficient revenues in to build a reserve asset base that will allow it to pay benefits for many years to come.  Amtrak never turned a profit; it does not have any reserve funds. It has never generated sufficient cash to cover its current operating expenses let along its capital expenditures.</p> <p>PBGC benefits are paid in accordance with an employee's vesting schedule in his or her employer's pension plan.  If I remember correctly, under ERISA, if you work for a private employer that offers a qualified pension plan for more than five years, you are vested in the plan, and you can collect retirement benefits, albeit very small amounts, when you reach retirement age.  If you work for a company for 25 years and leave, for whatever reason, you are vested for 24 years, as a rule, and are entitled to the vested benefits for 24 years of service when you reach retirement age.  </p> <p>The PBGC only pays out what you would have received, in most instances, under your private employer's legacy retirement plan.  If you lose your job at age 40, lets say, even if your employer continues to offer a pension plan, you would only receive at retirement age the amount vested from the time you began your employment until you reached age 40.  In other words, you would have to find another job to generate additional retirement benefits.</p> <p>The Congress established the PBGC and then saddled it with a variety of restrictions that have made it impossible to succeed financially.  It is just one more example of why the government should not be involved in commercial activities.</p> <p>If the pensions had been insured by a private insurance company, monies to cover the benefits probably would be available. Of course, the premiums would have been substantially higher, but at least no one would have had the wool pulled over his or her eyes regarding the financial viability of the insurer.</p> </div>
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