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Pension Benefit Guaranty Corporation

Pension Benefit Guaranty Corporation (PBGC)

Definition

An independent agency of the federal government that was established in 1974 as part of the Employee Retirement Income Security Act (ERISA). The purpose of the PBGC is to ensure that corporate pension obligations will be honored. In the event that a company's pension plan encounters financial difficulty in paying pension benefits to former employees, such as when a company declares bankruptcy, the PBGC will make the payments promised by the plans. However, these payments are subject to certain maximum monthly amounts per employee, based upon age and years of service. The PBGC is funded by premiums paid from pension plans.

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