Does anyone know if Pensions are protected if T has to file for bankruptcy?
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The PBGC's monthly maximum is twice as much as my annuity.
The PBGC monthly maximums are listed in this table.
https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee
It all hinges on funding levels. If att has fully funded the pension then you get your full payment. If not then it falls to the funding ability of the PBGC. If they can fund it at 100% then you will get a full payment each month. If not, they will reduce your monthly as needed to keep the fund solvent. I believe American Airlines retirement was not fully funded on one of their BRs and retirees received 60 cents for every dollar owed.
More important question, will they still pay the dividend?
It's protected under the Pension Benefit Guaranty Corporation. Just like Social Security, it is underfunded and can only pay a portion of the promised benefit. The sooner you start drawing from it, the better your chances of getting a full amount.
I find it hard to believe that someone with a long time income that generated $100K pension would not have significant other assets plus Social Security in addition to his pension so this is hard to believe. If if true his situation is mostly on himself.
Ps - Get a Costco membership and buy him some Kirkland brand scotch.
Almost all retirees except for the very highest compensated would receive 100% of their pension amount through PBGC. People who are saying otherwise don't know what they are talking about and are just using scare tactics for their own agendas.
Another GE scenario is in the works at AT&T:
https://money.cnn.com/2018/01/18/investing/ge-pension-immelt-breakup/index.html
Does anyone really think T would declare bankruptcy? One of the oldest , most funded corporation in America. As long as people are standing in line to give them money every month, bankruptcy would not be an option. Pension's safe.
Do AT&T and yourself a favor, take the lump sum as soon as you can
My brother in law retired from a huge corporation and his pension was over $100k per year. The "blue chip" filed for BK and his pension was transferred over to the govt's pension guaranty corp. Now his pension is $29k per year and based on his lifestyle --
he can now be found greeting customers M thru F at a Dallas Area Wal-Mart store (that is when he's not eating a free meal at my house, watching my tv, drinking my scotch or driving one of my beater cars.)
If, WHEN the T files for BK expect that huge current $15k pension to decline to about $3k per year. Yeah. T meets their obligations and takes care of their retirees/employees. NOT!
Remember DELPHI, ask the managers that worked there how PBGC worked out for them!
https://www.pbgc.gov/
There are two ways they can terminate the pension plan.
First, they can end a plan in a “standard termination,” but only after showing the PBGC that the plan has enough money to pay all benefits owed to participants. Under a standard termination, a plan must either purchase an annuity from an insurance company (which will provide you with periodic retirement benefits, such as monthly for life or for a set period of time when you retire) or, if the plan allows, issue one lump-sum payment that covers your entire benefit. The plan administrator must give advance notice that identifies the insurance company (or companies) selected to provide the annuity. The PBGC’s guarantee ends upon the purchase of an annuity or payment of the lump-sum. If the plan purchases an annuity for you from an insurance company and that company becomes unable to pay, the applicable State Guaranty Association guarantees the annuity to the extent authorized by that state’s law.
Below are links for issues on the State Guaranty Associations
(each State has their own guidelines, Coverages, Benefit Limits, etc)
https://www.nolhga.com/
https://www.nolhga.com/factsandfigures/main.cfm/location/stateinfo
Second, if the plan is not fully-funded, AT&T may apply for a distress termination. To do so, however, they must be in financial distress and prove to a bankruptcy court, or to the PBGC, that they cannot remain in business unless the plan is terminated. If the application is granted, the PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds.
Federal government would give pennies on the dollars from what they gave left in their protection fund. The reason I took cash balance and invested it myself. 🤪