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DB Plan Termination and PBGC


Guest nikomendy

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Guest nikomendy

Have several high-level questions regarding

single-employer db plan termination and PBGC

"takeover" versus normal reversion

(a) Have yet to see a case where a plan

was takenover by pbgc- and the plan sponsor

had not gone bankrupt or liquidated.

Is this generally the case... or can a plan sponsor simply let a funded plan become

unfunded (underfunded) to avoid steep reversion

on surplus.. and simply "cut and run" by letting

the pbgc cover it, assuming all of the pbgc premiums were paid up and in order?

(B) Separate and a part from premiums collected,

does the PBGC effectively play "robin hood",

from a collection of terminated plans ?

Example: a large plan(A) only slightly underfunded, with assets in place to cover most of its plan option pre-65 retirees and post 65 retirees is taken over.

Another large plan(B) with only post 65, demographic, is massively undefunded and is taken over.

Does the pbgc- in effect- with its pre-65 payout

reductions, cut the retirees from plan (a),

and use these gains to cover post 65 retirees

from plan (B)..?. although in the case described

Alot of the asset recovered from plan (a),

was in place to cover nearly all of the early

retirees from plan (a).

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Not sure I know what you are asking. But don't ever expect the PBGC to "bail you out."

I agree that a PBGC takeover will likely occur when the plan sponsor is no longer viable.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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