What happens to an employee's pension if their employer goes bankrupt?
Jan Meriss Alfonso Assistant at Ascent Law LLC The Pension Benefit Guaranty Corporation (PBGC) insures pensions. Its maximum annual payment is $54,000 per year for workers aged 65 and older. However, the amount can be reduced or increased depending on the circumstances. In rare instances, an employer may continue its pension plan even after bankruptcy. ERISA protects pensions An employee may be concerned that if their employer goes bankrupt, their pension benefits will be in jeopardy. However, ERISA protects pensions in all 50 states, as long as the pension benefits are properly funded and kept separate from the business's assets. Usually, the funds will be held in a trust or insurance contract, which will protect them from creditors. The Employee Retirement Income Security Act of 1974 (ERISA) is the Federal law that protects private sector employees who are covered by pension plans. The Act does not require employers to provide pensions, but it does require them to fund such pla...