Although so-called defined-benefit pensions were long considered the gold standard of retirement plans – promising guaranteed regular payments for life – corporate churn, financial pressures, and outright fiscal malfeasance have made many of them less secure than the employee-guided, non-guaranteed 401k stock investment plans that many companies now offer. Many affected workers and retirees – potentially 33 million in more than 25,000 federally protected defined-benefit pension plans – are among more than 70 million Baby Boomers (those born from 1946 to 1964) retiring at an accelerating rate, with only some 40% already retired.
That means the first federal backstop for such pensions created by Congress in 1974 – the Pension Benefit Guaranty Corporation – is being kept busy dealing with troubled plans, with about 1,600 terminations annually in recent years. All told, more than 145,000 plans shuttered from 1975 to 2019, with the PBGC becoming trustee for almost 5,000 of them.
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