One of my Google News "Alerts" is for Pension Plans, and The Pension Benefit Guaranty Corporation.
This is not meant to be advice, but just a heads up to be aware of the status of your plan, and what your options may be.
The PBGC operates in the red, by many billions of dollars and while it is not federally guaranteed, the general belief is that it would be supported, much in the same way that Fannie and Freddie have been saved by the government.
Despite the doubling of PBGC insurnce payments, the deficit has not been reduced, but continues to rise.
My concern comes from a number of different directions. Here in Illinois, Police, Fire and Teacher Pensions are so underfunded that no one will even discuss the subject. Similar Public pensions are in trouble throughout the country. Private pensions are similarly troubled.
Thusfar, pension problems have been minimized through liberal action by the PBGC to insure and pay off on most plans. Thusfar, a very few plans have been limited, with pensions under $50,000 being paid in full even after fund failure.
My concern comes from the more recent decisions and the hardening of the stand of the PBGC... first in allowing companies to default on plans in order to avoid or emerge from bankruptcy, and second, in some decisions that are being made to put some restrictions on plans.
In the most recent merger of US Airways and American, American was allowed to stop the existing plan, by honoring the full obligation to existing members. A little noticed part of the authorization was a change in the plan (by the IRS), to limit the ability of some members to opt for a lump sum payout.
While this is just one small example of possible future problems, a search for PBGC actions shows a large number of changes in plans, mitigating the original contracts.
In my own case, a year ago, one of my sons told me his Pension was 100% funded, and rated AAA or the equivalent. This year... not quite so sure, as funding had fallen, and the board of directors was being replaced.
The only reason I bring this up, is that I feel many are not aware of the stability of their pensions, or the future of the company that is providing the pension. I see many members incorporating their pensions in retirement plans.
By current law, and historically, Pension Funds have been among the safest ways to fund retirement. This will most likely continue in the future, but the thought is to understand the plan, to measure the safety, and to consider the possibility of a lump sum payout. More than that, though, to watch the legal decisions that are coming down with respect to changes in the rules of the game. Watching withdrawal rates is important, but so too, is incorporating planned funding from SS and Pensions. Trust, but verify.
This is not meant to be advice, but just a heads up to be aware of the status of your plan, and what your options may be.
The PBGC operates in the red, by many billions of dollars and while it is not federally guaranteed, the general belief is that it would be supported, much in the same way that Fannie and Freddie have been saved by the government.
Despite the doubling of PBGC insurnce payments, the deficit has not been reduced, but continues to rise.
My concern comes from a number of different directions. Here in Illinois, Police, Fire and Teacher Pensions are so underfunded that no one will even discuss the subject. Similar Public pensions are in trouble throughout the country. Private pensions are similarly troubled.
Thusfar, pension problems have been minimized through liberal action by the PBGC to insure and pay off on most plans. Thusfar, a very few plans have been limited, with pensions under $50,000 being paid in full even after fund failure.
My concern comes from the more recent decisions and the hardening of the stand of the PBGC... first in allowing companies to default on plans in order to avoid or emerge from bankruptcy, and second, in some decisions that are being made to put some restrictions on plans.
In the most recent merger of US Airways and American, American was allowed to stop the existing plan, by honoring the full obligation to existing members. A little noticed part of the authorization was a change in the plan (by the IRS), to limit the ability of some members to opt for a lump sum payout.
While this is just one small example of possible future problems, a search for PBGC actions shows a large number of changes in plans, mitigating the original contracts.
In my own case, a year ago, one of my sons told me his Pension was 100% funded, and rated AAA or the equivalent. This year... not quite so sure, as funding had fallen, and the board of directors was being replaced.
The only reason I bring this up, is that I feel many are not aware of the stability of their pensions, or the future of the company that is providing the pension. I see many members incorporating their pensions in retirement plans.
By current law, and historically, Pension Funds have been among the safest ways to fund retirement. This will most likely continue in the future, but the thought is to understand the plan, to measure the safety, and to consider the possibility of a lump sum payout. More than that, though, to watch the legal decisions that are coming down with respect to changes in the rules of the game. Watching withdrawal rates is important, but so too, is incorporating planned funding from SS and Pensions. Trust, but verify.
