My knowledge of this is second hand since I wasn't retired at the time and my benefits just got frozen at a pretty low level. The stories of cut benefits were told to me by prior coworkers (my direct boss included) who retired in their early to mid-50's just before the bankruptcy. I'm no expert on the PBGC, but I had a look at their "maximum monthly guarantee" values for 2007 https://www.pbgc.gov/wr/benefits/guaran ... -guarantee which was when our plan was turned over. According to that, a person who retired at 55 is only guaranteed up to $1856.25/month or $22,275/year. To be honest, I don't know what "maximum monthly guarantee" means. Perhaps it means that if the pension plan was well funded when the PBGC took over then they can pay out above that guarantee. Regardless, if someone were receiving, say, $150k/year and had a lifestyle consistent with that income then having income drop to $22k, $30k, or even $50k, is the kind of hit that sends them back to work.Valuethinker wrote: ↑Thu Jul 01, 2021 9:29 amI am not aware that the PBGC *ever* makes cuts that drastic in pensions?punkinhead wrote: ↑Wed Jun 30, 2021 5:15 pm In 1991 straight out of college I hired into a company with a pension program. In 2007 they went through bankruptcy and turned the pension over to the PBGC. I'll get maybe $25/year from the PBGC when I turn 62. I was one of the lucky ones because I ignored the promise of a pension and always maxed out my 401k. Plus I had time to recover. The ones that really got hurt were those that retired in their 50's just before the bankruptcy. The PBGC severely slashed their pensions and there was no opportunity for them to "unretire" and hold off taking benefits until the PBGC deemed them to be of retirement age. Those people will mostly have to work until they die.
That's just my cautionary tale of counting on a pension and not saving properly.
They cap benefits at a certain level, I believe - hence the pain of airline pilots.
Another big piece of it is that our employer promised us health coverage to bridge the gap to medicare. For someone retiring in their mid-50's, which was quite common for that company, they were counting on low/no cost health insurance for 10 years. That disappeared in the bankruptcy.