The Pension Benefit Guaranty Corporation will insure benefits up to a point, but it may not replace the full value of a pension if a plan goes belly-up. While the Pension Benefit Guaranty Corporation (PBGC) insures thousands of Pensions across the country, the entire benefit of your Defined Benefit Plan is in no way guaranteed.

Some corporations can “freeze” your pension, meaning they stop the counter on the number of years you’ve worked, and use that as the number to calculate your monthly payments. Many pensions today are struggling after the long period of low interest rates on fixed instruments like government bonds.

Many pensions at the state level, for instance, are drastically underfunded, and even the PBGC, has called on Congress to find a way to assist them, since they have had to bail out so many plans in recent years. The PBGC only inures each person’s benefit up to a certain amount; in 2016 this was $60,000 a year.

For this reason, careful planning and smart saving are crucial – you can’t rely on your Pension alone to get you through retirement. If you belong to a trade union, generally speaking, you are more protected since the trade union would negotiate on your behalf (they have a lot of clout). Their pensions are known as multi-employer pensions.

However, in the past 20 years, trade unions have been gradually disappearing. A Teamsters Union pension was unfortunately the first pension to have their benefits reduced by definition in 40 years, through provisions in an omnibus bill enacted in 2015 that allowed renegotiation of defined benefits for the sake of increasing the longevity of struggling plans.

Participants had their benefits payments reduced by as much as 25%. UPS pulled out of that plan nearly ten years before for a settlement amount because it was concerned about the liability it would incur if the plan became any more unstable.

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