C
chloe
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The Pension Benefit Guaranty Corp. (PBGC), an agency created by the federal government to pay pensions to employees of companies whose plans have terminated, explains that there are several ways to freeze a plan -- by closing it to new entrants, freezing benefits for only some of the employees, or in the case of a "hard freeze," halting accrual of pension benefits based on either job tenure or salary increases.
But any way you look at it, freezes, plus actual pension plan terminations that occur when companies merge or go out of business, pose a threat to the expectation that millions of future retirees will be able to count on receiving some or all of the guaranteed pension that they expected.
MORE WIDESPREAD. When companies freeze their traditional pension plan, they may offer the affected employees a 401(k), sometimes increasing the company's matching contribution if one was already available. But when a company simply does not have the money to pay the promised benefits, or shuts down a plan, the PBGC may end up paying the retirees a pension that is adjusted annually, but possibly less than was counted on. In 2006, the top amounts guaranteed by the PBGC are $47,659.08 for a 65-year-old, 37,650.72 for a 62-year-old, and $21,446.64 for a 55-year-old
Is Your Pension Plan Retiring Before You?
But any way you look at it, freezes, plus actual pension plan terminations that occur when companies merge or go out of business, pose a threat to the expectation that millions of future retirees will be able to count on receiving some or all of the guaranteed pension that they expected.
MORE WIDESPREAD. When companies freeze their traditional pension plan, they may offer the affected employees a 401(k), sometimes increasing the company's matching contribution if one was already available. But when a company simply does not have the money to pay the promised benefits, or shuts down a plan, the PBGC may end up paying the retirees a pension that is adjusted annually, but possibly less than was counted on. In 2006, the top amounts guaranteed by the PBGC are $47,659.08 for a 65-year-old, 37,650.72 for a 62-year-old, and $21,446.64 for a 55-year-old
Is Your Pension Plan Retiring Before You?