How to Secure Your Pension if Your Employer Goes Under

What pros wish you knew about “pension panic”

“Pension panic” spikes every time a company makes headlines for layoffs or a restructuring. I get it. I’ve sat across the table from folks with 30 years in and sweaty palms. Here’s the part most people miss in the noise: pensions aren’t just corporate promises scribbled on a napkin. Under ERISA (1974), they’re legal obligations with rules, funding requirements, and, critically, backstops. Bankruptcy doesn’t automatically wipe them away. It changes the process, not the fact that the plan owes you something.

Two anchors to remember right now, in 2025: First, many traditional pensions are insured by the PBGC. Second, the choices you make under stress, like racing to grab a lump sum, can permanently reshape your lifetime income, for better or worse. And yea, this year’s rate environment is flipping some old rules-of-thumb on their head.

Quick reality check: The PBGC reported it protects benefits for over 33 million workers and retirees in private-sector defined benefit plans (PBGC data, FY 2023). That coverage exists in two different programs, single-employer and multiemployer, with very different guarantees.

What we’ll cover in this section, high level and without the fear-mongering:

• ERISA makes pensions enforceable: Plans must follow specific funding and fiduciary rules. In a bankruptcy, the pension obligations don’t vanish; the plan may terminate or continue, but your claim is governed by statute, not goodwill. I started to say “priority structure,” which is too jargony, just think: the law decides who gets what and when.
• PBGC backstop has limits: For single-employer plans, PBGC guarantees can be sizable but capped by age and form of benefit. For multiemployer plans, the formula is smaller: the guarantee equals 100% of the first $11 plus 75% of the next $33 per month of service. At 30 years, that’s $1,072.50/month ($12,870/year), not nothing, but not a full replacement either (PBGC formula in effect for multiemployer plans).
• Your plan type drives your fate: A traditional pension (defined benefit) behaves nothing like a 401(k). Multiemployer pensions (common in union settings) have their own rules and guarantees. If your plan isn’t PBGC-insured, certain public and church plans, your playbook changes entirely.
• Decisions under stress can be costly: Cashing out a lump sum might feel safe, but it can lock in a lower lifetime payout. I’ve watched smart people do this in a panic and regret it 18 months later.
• Rates matter in 2025: Because discount rates are higher than they were a few years ago, many lump sums are smaller this year, while annuity streams often look relatively better. IRS 417(e) segment rates used for lump sums were much lower in 2021; that’s a big reason today’s cash-out math looks different.

One more thing I should clarify: “insured” doesn’t mean “everything’s guaranteed.” PBGC coverage can be generous for some, limited for others, and the fine print, age, form of benefit, early retirement subsidies, really matters. Also, access to traditional pensions keeps shrinking: in 2023, about 15% of private-industry workers had access to a defined benefit plan (BLS, 2023). Which is to say, if you’ve got one, treat it like the rare asset it is.

So the plan here is simple. We’ll separate myth from mechanics, show where PBGC coverage helps, and where it doesn’t, and map the handful of high-impact moves to consider before and during an employer collapse. If you came here searching “how-to-secure-pension-if-employer-goes-under,” you’re in the right place. It’s not about being fearless; it’s about avoiding avoidable mistakes while rates, and nerves, are where they are in Q4 2025.

First, identify exactly what you have (it’s not all “a pension”)

This sounds basic, but it’s the move that prevents 80% of avoidable headaches. Map every benefit by type and who stands behind it. Then you’ll know what’s at risk if your employer stumbles, and what’s not.

• Documents to pull now (yes, now): your Summary Plan Description (SPD), the latest Annual Funding Notice for any defined benefit plan, your most recent benefit statement(s), and the plan’s Form 5500 (public; grab it on DOL’s EFAST2 site). The 5500 and its schedules show the plan type, assets, auditor’s opinion, funding percentage, and whether there’s been a pension risk transfer or a plan merger. I know, it’s not thrilling weekend reading. But it’s the good stuff.
• Single‑employer defined benefit (traditional pension): Usually covered by PBGC’s single‑employer program. Coverage is benefit‑form and age sensitive, with an annual cap PBGC posts each year. I’m not going to pretend the cap is one-size-fits-all, early retirement subsidies and form (single life vs J&S) matter a ton. Point is: there’s a backstop, but it isn’t unlimited. Check your Annual Funding Notice for funded status trends and the PBGC’s current age‑65 cap table for this year.
• Cash balance plan: Still a defined benefit plan under ERISA, just with a notional “account.” Usually PBGC‑covered. Lump sum availability depends on the plan and interest rate basis. And rates? With discount rates still higher than the 2020-2021 era, lump sums this year can look smaller than folks remember. Not fun, but math is math.
• Multiemployer union plan: Different PBGC rules and a lower guarantee. The multiemployer guarantee formula is fixed by statute: PBGC guarantees 100% of the first $11 plus 75% of the next $33 of the monthly benefit rate per year of service. For someone with 30 years of service, that caps out at $12,870 per year (PBGC formula, unchanged for years). That’s it, far lower than single‑employer caps. Also remember the Special Financial Assistance program kept many plans afloat after 2021, but the guarantee itself didn’t increase.
• 401(k)/403(b): Not PBGC‑insured because it’s not a pension promise. But assets are held in trust, separate from the employer’s balance sheet, and portable if you leave. Your Form 5500 (Schedule H) will show custodians, auditors, and whether the plan has an independent audit. If your company goes under, your account doesn’t join the bankruptcy estate, it’s yours.
• ESOP: Company stock in a tax‑advantaged plan. No PBGC. It’s still an ERISA plan, but the risk is concentration in one employer’s equity. Watch the repurchase obligation and your diversification rights as you age in. If your stomach drops when you check the stock chart, fair. I’ve had that feeling too.
• Insurance annuity from a pension risk transfer? If your former employer moved liabilities to an insurer, PBGC coverage stopped on that portion. State guaranty associations are now the backstop. Caps vary by state and product, often around $250,000 present value for annuity benefits, but it’s not uniform. Look up your state’s cap and the named insurer rating. This one is always where I get a little animated: insurer quality matters more than the brochure font.

Quick reality check you may not want but need: last year only about 15% of private‑industry workers had access to a defined benefit plan (BLS, 2023). If you’ve got a DB promise, traditional or cash balance, treat it like a rare asset, because it is.

Now, make a one‑page map. For each benefit, write: plan name, type, current balance or accrued benefit, who insures it (PBGC single‑employer, PBGC multiemployer, state guaranty association, or trust/custodian), and the contact portal/phone. Add the funded percentage from the Annual Funding Notice for DB plans and note any risk transfer in the 5500 or company filings. If you’re thinking, “Is this overkill?”, nope. When layoffs hit or a sponsor wobbles, you won’t have time to hunt PDFs.

Beneficiaries and elections: open your statements and list beneficiaries across every plan. Check options: single life, joint & survivor (50/75/100%), term certain, pop‑up, lump sum availability. Fix gaps now. I’ve seen too many people assume HR “has it on file.” Then HR gets restructured and, well, you can guess the rest.

One last thing I haven’t mentioned yet, cash‑out math shifts with rates later this year. If your plan recalculates lump sums annually, ask for the basis (IRS 417(e) segment rates, plan‑specific lookbacks) and timing. Small tweak, big dollars.

If your employer fails: how pension backstops really work

Okay, you wake up to bankruptcy headlines. What actually happens to your pension check? Two very different paths matter here: standard vs distress termination. In a standard termination, the plan is fully funded on a termination basis and the sponsor settles obligations by buying an annuity from an insurer (or paying lump sums if allowed). In a distress termination, the sponsor can’t fund the promises and the Pension Benefit Guaranty Corporation (PBGC) steps in for single‑employer plans.

• Single‑employer plans: In a distress termination, PBGC may take over as trustee, review the plan, and start paying guaranteed benefits. Last year (2024), PBGC’s max guarantee at age 65 was $7,107.95 per month (about $85,295 a year), from PBGC’s 2024 tables. Younger ages get less; older get more because of actuarial adjustments. You’ll keep receiving payments during the transition, but after PBGC finishes its audit, your monthly amount can change.
• Multiemployer plans: There’s no takeover in the same way. The PBGC guarantee is formula‑based and much smaller. With 30 years of service, the maximum guarantee is roughly $12,870 per year. ARPA (2021) Special Financial Assistance stabilized a lot of struggling funds, PBGC reported in 2023 that many plans were pulled back from insolvency, but guarantees remain modest.

And here’s the part people miss. PBGC doesn’t guarantee everything your plan promised. Unfunded early retirement subsidies, like “30-and-out” deals or heavily subsidized early benefits, can be pared back. Same with recent benefit increases; raises adopted within the PBGC’s lookback windows may be partially or fully excluded. COLAs and temporary supplements (like a bridge payment to Social Security age) are often not guaranteed. It’s the classic mismatch: what your plan says vs what the guarantor backs. I’ve sat with retirees who saw a 10-25% haircut after the final PBGC determination because of these features. Not fun, but better to plan for it now than be surprised later.

Now the good news, yes, actual good news. If your plan is well‑funded, it can terminate without PBGC cutting anything. In a standard termination, your benefit is moved to an insurance company via group annuity. Payments continue per the contract. The protection shifts from PBGC to your state guaranty association. Coverage limits vary by state and product type (commonly in the $250k-$500k present‑value range), and caps apply per owner/annuitant. You’ll want to check your state’s rules and the insurer’s ratings, especially with 2025 annuity yields still decent after the Fed’s “higher for longer” stance this year.

Quick real‑world snapshot: A 62‑year‑old with a rich early subsidy might get $3,200/month pre‑failure. After PBGC review, the guaranteed amount could land closer to $2,600-$2,900/month depending on the formula, service cap, and the timing of any past amendments. Payments continue the whole time; the amount just resets after the determination.

But a few practical points while we’re both thinking this through:

1. Keep cash flow steady: Expect payments to continue during a PBGC or annuity transition. Just budget for a possible adjustment later.
2. Age matters: The 2024 PBGC max at 65 was $7,107.95/month; if you start earlier, your cap is lower. If you can delay commencement, and I know that’s not always possible, you might protect more.
3. Watch plan features: Early subsidies, temporary supplements, and COLAs are the first to be trimmed under PBGC rules.
4. Standard termination ≠ free pass: Your benefit is now an insurance promise. Read the annuity certificate, confirm survivor elections carried over correctly, and check state guaranty limits.

I should say this too, because I haven’t actually mentioned it yet the way I intended: During stressed markets (we had a bumpy Q2 and rates are still sticky in Q4 2025), plan termination timing can swing calculated liabilities by a lot. Higher rates make annuities cheaper to fund; lower rates do the opposite. Sponsors time these, sometimes aggressively. That can be good for plan funding, but it can also accelerate a standard termination when the window is favorable to the company.

And my tone’s about to change, because this part genuinely excites me. Documentation wins. If you’ve got your vesting service, optional forms, and beneficiaries crystal‑clear, you’re in a stronger position no matter which path hits. It sounds boring, but it saves dollars. I watched a client fix a beneficiary mismatch two weeks before an insurer novated the plan. That one email meant his spouse’s 100% J&S actually survived the transfer. Relief doesn’t begin to cover it.

Bottom line: translate the headline. Standard termination? Think insurer and state guaranty. Distress termination? Think PBGC caps, review period, and potential trims to early perks and COLAs. And if yours is a multiemployer pension, the ARPA lifeline helped, but the statutory guarantee (about $12,870/year at 30 years) is small, so keep your personal safety net intact.

Your 48‑hour checklist when trouble hits payroll

When headlines start whispering layoffs or missed contributions, you don’t need a thesis, you need a punch list. Here’s the 48‑hour playbook I use with clients. It’s tactical, it’s boring in the best way, and it protects dollars when the rumor mill is loud and HR is… let’s say, busy.

1. Download everything. Today. Grab the plan SPD, Summary of Material Modifications, annual funding notices, blackout notices, and your most recent benefit statements (pension and 401(k)). Save PDFs of paystubs and W‑2s from the last 3-5 years, those are your proof of compensation for pension calculations. Screenshot your online beneficiary elections. And yes, save the contacts: HR benefits lead, plan administrator, recordkeeper, and any third‑party actuary/consultant listed on notices. If you’re in a multiemployer plan, keep the fund office’s phone and email handy.
2. Ask for a written benefit estimate, now, and verify the guts. Request a formal pension estimate with payment options (single life, 50%/75%/100% J&S, and lump sum if available). Ask them to include your credited service by year and compensation history used in the formula. Early retirement factors and subsidies too. Don’t be shy; accuracy here prevents headaches later. Quick stat reminder I mentioned earlier: multiemployer guarantees are limited, about $12,870 per year at 30 years of service under the PBGC’s statutory guarantee, which isn’t a lot if your earned benefit is bigger. So the paperwork matters.
3. If you’re near retirement, price both the annuity and the lump sum, this week. Interest rates have been choppy this year, with long corporate yields bouncing around and plan discount rates moving with them. Lump sums move opposite rates: lower rates generally mean higher lump sums, but plans often lock to prior month’s segment rates. Ask if you can lock a quote window. Compare apples-to-apples: use a realistic life expectancy and today’s high‑quality annuity rates to price the J&S income stream. Don’t rush the election without that comparison, 2 hours of math here can be worth five figures. And circling back, if you can lock a quote, lock it, but only after you’ve seen both sides on paper.
4. Keep 401(k) contributions flowing until separation. While you’re still on payroll, keep deferrals going (employer match, if any, is free money until the lights go out). After separation, do a trustee‑to‑trustee rollover to an IRA or new plan. That direct rollover avoids the mandatory 20% federal withholding on distributions paid to you. If you take a check made out to you, they’ll withhold 20% and you’ll have 60 days to redeposit the full amount, including the withheld piece, or it’s taxable and possibly penalized. Not worth the stress.
5. Freeze big decisions for 72 hours. Pressure and rumor are not a strategy. Give yourself three days to verify service credits, confirm vested percentage, and read the funding notice language. PBGC coverage works differently across plan types, and early subsidies or COLAs can be shaved in certain termination scenarios. Speed helps with collecting documents; accuracy wins on elections.

One more operational note: send all requests by email and keep a simple log, date, who you asked, what you asked for. If phones are ringing off the hook, a documented email trail gets you answered sooner and gives you use if something’s mis‑keyed. I’ve seen one stray service credit drop a monthly benefit by 6-8%; catching that early is the cheapest money you’ll ever make.

Snapshot reality check: if your plan is multiemployer and in trouble, ARPA helped stabilize many funds, but the statutory PBGC guarantee is limited, roughly $12,870/year at 30 years of service. That’s the backstop, not the goal. Your clean records and timely elections are what keep you above that floor.

Last thing, promise: breathe. Markets are jittery this fall, rates are zig‑zagging, and companies are trimming fat into year‑end. Your job is to lock facts, compare options, and avoid unforced errors. The checklist does exactly that.

401(k), cash balance, and company stock: keep what’s yours, protected

Quick reality check: your 401(k) or 403(b) is held in a trust under ERISA. That means plan assets are segregated from the employer’s balance sheet. If the company is wobbling or files bankruptcy, employer creditors generally can’t touch those plan assets. I’m not guessing here, that trust structure is the point of the whole regime. Your money is yours.

Execution still matters. If you’re leaving or the plan is getting spun to a new recordkeeper, use a direct (trustee‑to‑trustee) rollover to an IRA or your new employer’s plan. No checks to you, no “I’ll deposit it later.” Why? If a distribution check is made payable to you, the plan must withhold 20% for federal taxes, and you have a 60‑day window to redeposit the full amount or it’s taxable (plus a 10% early distribution penalty if you’re under 59½). I’ve seen good people eat a five‑figure tax bill because a check sat in a drawer during a chaotic job change. Don’t do that to yourself.

Company stock in the plan? This is where the tax code gets cute. The Net Unrealized Appreciation (NUA) rules can cut taxes if you do it right: when you take a qualifying lump‑sum distribution after a triggering event (separation from service, reaching 59½, disability, death), you can move the stock to a taxable account and roll the rest to an IRA. Your cost basis in the stock is taxed as ordinary income now, but the embedded gain, the NUA, gets long‑term capital gains treatment when you sell later. The catch: you generally need to distribute the entire plan balance in one tax year and in the right sequence. Miss a step, and the NUA benefit can vanish. If your employer is under stress and trading windows are tight, map this with the recordkeeper in writing first.

On cash balance plans, yeah, they look like accounts, but they’re technically defined benefit plans (DB). Translation: PBGC rules and DB funding rules apply. If the plan’s funded status falls, lump sums can be limited under Internal Revenue Code §436: at an AFTAP (funding) level of 80% or higher, lump sums are generally available; between 60%-80%, lump sums may be restricted or partially paid; below 60%, they can be shut off until funding improves. That’s not a threat, it’s just the rulebook. If a freeze is rumored, ask HR for the most recent AFTAP notice before you decide on timing.

Stable value funds deserve a quick note. These are usually wrapped by insurers with book‑value accounting (that’s why you don’t feel every rate jiggle). But during employer events, mergers, spinoffs, or plan termination, contracts can impose a “put” delay or a market value adjustment. A 12‑month put is common on some wrap contracts if the plan wants out wholesale. Practical tip: if you think a plan change is coming, shift the slice you need for near‑term cash into a standard money market inside the plan ahead of time. No drama, no gates.

More conversational for a second: if more than about 10% of your retirement pie is in company stock, you’re running concentration risk, career and nest egg on the same horse. I know, the stock felt like free money when the grant hit. Been there, got the t‑shirt. Set a plan to diversify as soon as trading windows allow. Even if it’s just quarterly drips out over a year, get moving. Regret is not an investment strategy.

Jargon watch, I said “trustee‑to‑trustee” and “AFTAP” like that’s everyday English. It isn’t. In plain terms: keep your money moving directly between institutions so taxes don’t accidentally trigger, and check whether the cash balance plan is fully funded enough to let you take a lump sum. That’s it.

Key numbers to keep straight: 20% mandatory withholding on checks payable to you from 401(k)s, a 60‑day rollover limit if you go indirect, 10% early distribution penalty if under 59½, NUA requires a one‑tax‑year lump‑sum distribution with the stock moved out specifically, and DB lump sums can be restricted below 80% funding under §436. Markets are choppy this fall and rates are still high-ish, so stable value is behaving, but contract terms still rule during employer distress.

2025 reality check: taxes, interest rates, and timing mistakes to avoid

Quick truth: the math changed this year. With rates still elevated in Q4 2025, pension lump sums are generally smaller than what folks saw back in 2021-2022, while plan annuities can look relatively better. Why? Higher discount rates shrink the present value of future payments. The IRS 417(e) segment rates that most plans use have hovered around the mid‑5% range for much of 2025 (varies by month and segment), compared with roughly 2%-3% territory earlier in the pandemic era. That’s a big swing. I almost said “duration convexity,” but here’s the plain English: when rates rise, the check you’d need today to replace the same lifetime stream gets smaller. So if your plan’s annuity factors didn’t move up one‑for‑one with market rates, the annuity might stack up better than it did a few years ago.

Timing matters. A lot. The SECURE 2.0 Act set the Required Minimum Distribution (RMD) starting age to 73 effective 2023. If you turn 73 this year, you can delay your first RMD until April 1, 2026. But that means you’ll owe two RMDs in calendar 2026, which can push you into a higher bracket and mess with Medicare IRMAA brackets. Most of my clients prefer to take the first RMD in the year they turn 73 to avoid the double‑hit. Not glamorous, just clean.

Annuities from your plan, an insurer buyout, or PBGC, those payments are ordinary income. Set withholding on day one. If you’re estimating, the IRS underpayment penalty safe harbor says pay in at least 90% of this year’s tax or 100% of last year’s (110% if your AGI was high). It’s boring, but missing this leads to penalties that feel… avoidable. For periodic pension/annuity withholding, use the current Form W‑4P; don’t let default assumptions under‑withhold while you’re traveling or busy with grandkids.

If you take a lump sum payable to you (not a direct rollover), expect 20% mandatory withholding on eligible rollover distributions from 401(k)/profit‑sharing plans. If you’re under 59½ and not eligible for an exception, there’s likely a 10% early distribution penalty on top. Direct trustee‑to‑trustee rollovers avoid both the 20% haircut and the 60‑day scramble. I’ve watched people try to “float it” and replace the withheld 20% within 60 days, works on paper, trips folks up in real life.

Plan health can quietly limit your choices. Under the funding‑based limits in IRC §436, plans with an AFTAP under 80% can restrict accelerated forms like lump sums and benefit increases. Drop under 60% and the screws tighten even more. Translation: don’t bank on a lump sum that may be legally shut off if markets wobble or your sponsor hits a rough patch.

Employer stability question, yeah, it’s on everyone’s mind this year. If your plan terminates in distress, the PBGC steps in for single‑employer plans and pays guaranteed benefits (subject to caps) as ordinary income. Two implications: (1) new lump sums generally stop after termination; (2) if you were eyeing a cashout, waiting can remove the option. PBGC and insurer checks are taxable the same way, so line up withholding and quarterly estimates to avoid penalties. Small but annoying point: states have their own rules; don’t forget those when you set withholdings.

A quick checklist to keep mistakes from getting expensive:

• Compare apples to apples: Request both the annuity and lump‑sum quotes on the same valuation date. With 2025 rates, annuities often look around 5%-6% “implied yield” before taxes, but do the plan‑specific math.
• RMD timing: Year you hit 73, decide whether to take it this year or by April 1 next year. Watch tax brackets, IRMAA, and capital gain stacking.
• Withholding: Set W‑4P for pensions/annuities; use safe‑harbor estimates (90% current year or 100%/110% prior year) to dodge penalties.
• Rollovers: If you want tax deferral, use a direct rollover. If a check is made to you, 20% is withheld and the 60‑day clock starts.
• Funding limits: Check the latest AFTAP. Under 80% can restrict lump sums; stress at the employer raises the odds options get closed.

Bottom line in this rate environment: annuities aren’t the bad deal they looked like in 2021-2022, lump sums are smaller because discount rates are higher, and tax timing, especially first‑year RMDs and withholding, can save you thousands. Don’t overthink the jargon; focus on the cash flows, the tax calendar, and whether your plan can legally offer what’s on the menu.

Do the 60‑minute pension drill this week

Set a timer. One hour. You’re not building a model; you’re making sure your paycheck-in-retirement survives headlines and HR policy changes.

1. Inventory the benefits and the backstops:
   • List each pension, cash balance, and deferred comp plan. Add any in-plan annuity or lifetime income rider.
   • Next to each, write the backstop: PBGC (single‑employer DB), a state life/annuity guaranty association (for insurance-company annuities), or “plan trust only” if it’s nonqualified. PBGC says it protects the pension benefits of over 33 million people in private‑sector plans across thousands of plans (public PBGC tally; 2020s era), that’s your safety net if the sponsor fails.
   • For insured annuities, note your state’s guaranty cap. Most states are $250,000 of present value coverage for annuities; a handful run higher (some $300k-$500k). It’s state‑by‑state and it’s not a policy you can buy, just a statutory backstop.
   • Write your current election options: single life, 50%/75%/100% J&S, period certain, lump sum if available, early vs normal retirement. If the Summary Plan Description is out of date, flag it.
2. Get a fresh estimate at 2025 rates:
   • Ask HR/recordkeeper for a current benefit estimate and a side‑by‑side: annuity vs lump sum using the 2025 plan assumptions. Many plans still reference IRS 417(e) segment rates that have hovered roughly in the mid‑5% to low‑6% range this year; that pushes lump sums lower and makes annuity payouts look comparatively better than they did in 2021-2022.
   • Print the quote. Circle the monthly net after withholding. You can always tweak withholding later, but seeing the cash is key.
3. Trim employer stock risk:
   • If more than, say, 10%-15% of your retirement money is in employer stock, shave it. I’ve watched too many folks ride a great company… until it wasn’t. You need to sleep. If separation looks likely, map a direct rollover path now (which IRA, custodian, and what you’ll buy on day one) so you don’t end up sitting in cash after a market pop.
4. Lock spouse/beneficiary choices, on paper:
   • Write down which survivor option you’d pick today and why. Taxes, health, age gap, other income, two sentences is fine. Sign it. Doesn’t bind you; it anchors your future decision when the pressure hits. And yes, I’m repeating myself because this part gets skipped.
5. Calendar a 12‑month check‑in:
   • Plans, rates, and rules move. PBGC maximum guarantees change annually; state guaranty limits can be amended; plan AFTAPs drift with markets. Put a meeting on your October 2026 calendar to refresh estimates and recheck funding status and options.

One more thing I should’ve said earlier: if your gut is asking how-to-secure-pension-if-employer-goes-under, make two quick calls, HR for the latest funding notice and the insurer (if your plan was annuitized) for policy confirmation. If PBGC is your backstop, remember it pays guaranteed benefits up to its cap at your age; if you’re under the cap, historical recoveries tend to be very high. If you’re over, model the haircut before you stake your retirement on it. I started to say “don’t worry,” but, well, worry productively.

Rates are still decent this year, equities have been choppy, and corporate credit spreads aren’t exactly screaming panic. That combination keeps annuity math competitive and lump sums tighter. If you stall, the window can shift fast with just a few months of rate prints. Do the hour. If you need 90 minutes, fine, but finish it this week.

Checklist recap: what you have, who backs it, what it pays at today’s rates, where your stock risk sits, who gets paid if you don’t, and when you’ll check again. Headlines won’t make those decisions for you, until they do.

Frequently Asked Questions

Q: Should I worry about losing my entire pension if my employer files bankruptcy?

A: Short answer: no, not your entire pension. As the article points out, ERISA makes pensions legal obligations, not handshake promises, and bankruptcy changes the process, not the fact that the plan owes you something. Many private pensions are backstopped by the PBGC, which reported protecting benefits for over 33 million workers and retirees in FY 2023. The guarantee isn’t unlimited, single‑employer plans have age- and form‑based caps, and multiemployer plans use a smaller formula, but it’s not a zero. Translation: panic is optional; information isn’t.

Q: What’s the difference between PBGC coverage for single‑employer and multiemployer pension plans?

A: Per the article, single‑employer PBGC guarantees can be sizable but are capped and depend on your age and benefit form (single life vs joint, etc.). Multiemployer guarantees are much smaller and formula‑based: 100% of the first $11 plus 75% of the next $33 per month of service. At 30 years, that’s $1,072.50/month (about $12,870/year). Action items: check your Summary Plan Description or Form 5500 to confirm plan type, estimate your guaranteed amount, and note that increases granted in the last few years before termination may not be fully guaranteed.

Q: Is it better to take a lump sum now or wait for the annuity?

A: It depends on three big levers: (1) Rates: when discount rates are high (like this year), lump sums tend to be lower relative to the annuity; when rates fall, lump sums get richer. (2) Longevity: if you (and your spouse) expect long lifespans, the annuity’s lifetime income usually wins. (3) Taxes and behavior: a rollover IRA keeps the lump sum tax‑deferred, but if you’ll nibble at it, the annuity’s forced discipline can be worth real money. Practical steps: get a side‑by‑side quote at the same commencement date, compare the annuity to buying the same income in today’s annuity market, consider survivor options for your spouse, and only take a lump sum if you’ll roll it to an IRA immediately, avoid 20% withholding and early‑withdrawal penalties. And yea, if you’re within a year of retirement, run the scenario twice with a lower rate assumption in case you can time a more favorable lump sum window.

Q: How do I protect myself right now if there are layoff or bankruptcy rumors?

A: Do the unglamorous blocking and tackling. 1) Get your official benefit statement and verify service credits, compensation history, and vesting, fix errors before the plan freezes or terminates. 2) Confirm plan type and backstop: private plans may have PBGC protection; state/local government plans and many church plans are not covered by PBGC (new but important), so the rules and backstops differ, ask HR point‑blank which bucket you’re in. 3) Lock down beneficiaries and spousal consent forms; missing paperwork can delay or reduce payouts. 4) If a lump sum is on the table, pre‑open a rollover IRA so you can execute without triggering taxes. 5) Keep pay stubs, W‑2s, and plan notices, documentation wins disputes. I’ve sat with too many folks who waited until after the HR team was, well, gone. Don’t be that person.

@article{how-to-secure-your-pension-if-your-employer-goes-under,
    title   = {How to Secure Your Pension if Your Employer Goes Under},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/protect-pension-employer-failure/}
}