Expert: Allen - 11/19/2006

Question
My late husband worked for a company that had very good benefits, and among them was a guaranteed pension, which I, as  the surviving spouse, have been receiving.  However, a company from Great Britain has bought them out and I am concerned that the pension may not be continued, despite the fact that it is insured by PBGC, and protected under ERISA.

This is the statement that was sent to all pensioner's.  "From an historical perspective, (new company) has been funding their existing pension plans for (other companies that have been taken over by them),  based on the level of funding that is recoverable in their respective rate making agreements, up to the tax deductible level allowed by the IRS.  They are also funding their current plans to meet the funding requirements as established by ERISA."  If I read it correctly, they seem to be saying that probably the pensions will be continued,  but there are no guarantees.  Should I be concerned, or do you think that in all probability, the pension is legally protected and will continue.

Thank you for helping me.  

Answer
The pension is guaranteed. Assets in the plan must be kept in a trust which is separate from company assets. If the company went bankrupt, PBGC would have one of the first claims on company assets. If assets were not sufficient, PBGC would pay pensions.
There is only one possible problem. If PBGC was involved, they only guarantee pensions up to a certain amount which is based on the number of years your husband was a participant in the plan. This would only affect you if his benefit was large.