A company that has been providing generous defined benefit pension plans to all its retirees for the past 50 years is now facing bankruptcy and is unable to pay the pension amount. Which of the following statements is true of the given scenario?
A) The PBGC will pay the retiree benefits from the solvency fund.
B) The company must decrease the amount of pension payments based on the available amount of money in the pension fund.
C) The employees will have to forfeit their pension benefits.
D) The company can suspend pension payments until the pension fund has been fully recovered.

Question

Quizplus · Accepted Answer

The Pension Benefit Guaranty Corporation (PBGC) is a federally funded corporation that protects the retirement incomes of over 34 million American workers and retirees. It guarantees a certain level of retirement benefits paid from private sector defined benefit plans. Therefore, in the given scenario, the PBGC will pay the retiree benefits from the solvency fund. However, the amount they receive may be less than what was originally promised by the company.

A Company That Has Been Providing Generous Defined Benefit Pension