U.S.firms reorganizing under Chapter 11 have the right to terminate underfunded pension plans.Who picks up the uncovered pension costs?

Question

Quizplus · Accepted Answer

Underfunded pension plans are protected by the Pension Benefit Guaranty Corporation (PBGC), a government corporation that backs pension plans sponsored by private employers. If a company terminates an underfunded plan, the PBGC pays guaranteed benefits to retirees and beneficiaries, up to a certain limit. However, the PBGC only covers certain benefits and has limits on the amount of benefits it will pay out. Therefore, in some cases, retirees may still face a reduction in their pension benefits.

USFirms Reorganizing Under Chapter 11 Have the Right to Terminate