Question by Paul M.: How safe is the money in your pension fund? What if the company goes bankrupt? Is there an FDIC-type agency?
to back the money in the pension fund? How many percent of the money can you expect to get?

Best answer:

Answer by Thor
Are you talking about a defined benefit plan or something like a 401(k)?

For a defined benefit plan that is taken over it depends on the amount of the assets and liabilities. The government does back it some but you might get like 50% on the dollar. I have heard of some as low as 10 cents.

Depending on how well the pension is funded the company failing doesn’t necessarily mean the pension fund will fail. Although, often, they do invest in the same company’s stock. But now there are some new limitations on that after Enron. And over the coming years they are supposed to be fully funded to cover the earned payouts.

There is no insurance for stock losses in a 401(k) if that is what you are talking about. The brokerage failing or the company failing won’t effect your stock ownership in the plan, unless you invested in company stock . You are protected against fraud up to 0k.

Know better? Leave your own answer in the comments!

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Friday, December 11, 2009 began what may be a catastrophic era for Pennsylvania taxpayers. The Board of Trustees of the Pennsylvania School Employees Retirement System (PSERS) voted to increase the employer contribution rate to 8.22% of payroll for 2010-11, a 72% increase from this years rate. Those percentages will continue to climb, reaching a projected rate of near 30% of payroll by 2012-13 and are estimated to remain above 20% for nearly two decades. How much will school property tax bills increase in order to fund this projected spike and ensuing plateau? How could it harm our childrens education, our childrens school environment and other community programs? PSERS is a governmental, mandatory, multi-employer, defined benefit pension plan for Pennsylvania school employees. It was established in 1917, and is one of the oldest public pension plans in the United States. There are currently 739 school employers enrolled in PSERS, serving more than 547000 members, including those who are active, retired, vested and inactive. A number of factors have led the system to the precarious fund balance position it currently holds. Government intervention, declining investment returns and the continued sluggish economy have all contributed to the dilemma. PSERS is funded from three sources: employee (member) contributions, employer (school district and state government) contributions and investment earnings. (The “employer” share is, of course, the taxpayer portion of the cost …

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