Illinois finances are very questionable. Since my son works in a law firm that provides risk management services to part of the state operations, I wondered about the safety of his pension, as he will retire next month. Fortunately, his pension is provided for separately from the state plans, and checking the safety of the plan puts the safety factor above the 95% level.
Looking beyond that, on searching the term "Pension Plan Safety", there are many websites that discuss the subject. That said, centering in on all of the variables brought me to this government link, which answers most of the basic question about pensions, and pension safety. PBGC = Pension Benefit Guarantee Carporation.
https://www.pbgc.gov/wr/benefits/guaranteed-benefits/your-guaranteed-pension
Too many factors to mention here, but one factor is the maximum benefit that is guaranteed under the plan. $60,000.
A secondary thought is the current safety of the PBGC itself...
The current status of the PBGC:
Probably not a bad idea to check the current safety level of existing plans, as being inclusive in retirement planning.
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I am reminded of my best friend's neighbor who had been a pilot for United Airlines, for his entire working career. He planned to retire with a 6 figure pension in 2006, and accordingly had purchased a very expensive home as well as cars etc, etc. When UA went bankrupt in 2005, the pension plan was turned over to the PBGC, which (as I recall), had a maximum payout of about
$40K.
Looking beyond that, on searching the term "Pension Plan Safety", there are many websites that discuss the subject. That said, centering in on all of the variables brought me to this government link, which answers most of the basic question about pensions, and pension safety. PBGC = Pension Benefit Guarantee Carporation.
https://www.pbgc.gov/wr/benefits/guaranteed-benefits/your-guaranteed-pension
Too many factors to mention here, but one factor is the maximum benefit that is guaranteed under the plan. $60,000.
A secondary thought is the current safety of the PBGC itself...
PBGC is not funded by general tax (link is external) revenues. Our funding comes from (1) insurance premiums paid by companies whose plans we protect; (2) investments; (3) assets of pension plans that we take over as trustee; and (4) recoveries in bankruptcy from the companies formerly responsible for the plans. Your insured plan remains protected even if your employer fails to pay the required premiums.
The current status of the PBGC:
The Pension Benefit Guaranty Corporation (PBGC) is an independent agency of the United ... 57 multiemployer pension plans. The agency's deficit increased to $76 billion. It has a total of $164 billion in obligations and $88 billion in assets.
Probably not a bad idea to check the current safety level of existing plans, as being inclusive in retirement planning.
Your plan administrator must provide participants with an Annual Funding Notice about your defined benefit plan. The notice provides the following information: (1) how well your pension plan is funded; (2) the value of your pension plan's assets and liabilities; (3) how your pension plan's assets are invested; and (4) the legal limits on how much PBGC can pay if your pension plan ends.
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I am reminded of my best friend's neighbor who had been a pilot for United Airlines, for his entire working career. He planned to retire with a 6 figure pension in 2006, and accordingly had purchased a very expensive home as well as cars etc, etc. When UA went bankrupt in 2005, the pension plan was turned over to the PBGC, which (as I recall), had a maximum payout of about
$40K.
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