Are defined benefit (DB) pension plans guaranteed in the U.S.?

What happens to a DB pension plan and plan benefits if the sponsor company goes bankrupt?

Where can somebody find more information on how their DB plan may or may not be protected?

2 Answers 2


Yes, DB pensions are "insured" by the Pension Benefit Guaranty Corporation (PBGC), a Federal Government Corporation created under ERISA (Employee Retirement Income Security Act) back in the '70s. It's purpose is to provide protection to DB pension plan participants in the event of a sponsor's bankruptcy, insolvency, or inability to fully fund a DB plan. In a sense the PBGC is analogous to the FDIC and similar governmental corporations.

There are limitations as to what is protected and I found out that there are limitations to the protection for those in the airline industry, as some pilots that I know received reduced pensions from PBGC even though they had higher vested benefits. Perhaps other industries are affected as well.

If you want to find out more about the PBGC and what it covers you can go to www.pbgc.gov


NO, you are incorrect. The correct company is the Pension Benefit Guaranty Corporation. For proof, go to the following website:


The industry has no bearing on the type of guaranteed benefits, but rather the way the benefits are defined. If a company knows they are going to go bankrupt, they typically will first look to increase pension benefits, as there is no immediate cost as there are in raises and other benefits. This keeps the employees happy, temporarily. The PBGC knows these tricks and has to protect its own assets. The PBGC is entirely self-funded and must take these types of steps to continue protecting benefits.


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