Are pension plans insured?

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UPDATED: Jul 16, 2021

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Written By: Jeffrey JohnsonUPDATED: Jul 16, 2021Fact Checked

Whether or not your pension plan is insured will depend on the type of pension plan you have. Subject to certain limitations, the Pension Benefit Guaranty Corporation insures certain benefits under defined benefit pension plans. There is generally no insurance for a defined contribution plan.

Defined benefit pension plans are set up to ensure that employees are taken care of after retirement. Because employees depend on pension plan income, many pension plans are insured so that the pension plan itself is protected from anything that may happen to the business. This is usually done through the government or through private insurers.

ERISA or the Employee Retirement Income Security Act of 1974, created the Pension Benefit Guaranty Corporation in order to ensure that workers’ pensions would be safe in the event that a business goes under and/or mismanages pension funds, resulting in the promised pensions not being available to employees. However, the insurance offered through this plan only applies to certain workers and employees, and only to those who have vested defined pension benefit plans. As of 2011, approximately 44 million Americans have plans protected by the Pension Benefit Guaranty Corporation. In other cases, defined benefit pension plans may be insured by the company who is offering the plan. However, the insurance plan must be maintained by the employer in order for the pension plan to stay valid.

It’s not legally mandated that every employer provide a pension plan, nor is there a legal mandate that any employer that provides a pension plan for employees has to have it insured. Whenever you contribute to a pension plan, you should make sure before contributing to it from your own earnings that it is indeed insured so that you’re taken care of in your retirement.

If you have concerns about your defined benefit pension plan or any of your legal rights relating to your pension plan, it’s always in your best interest to speak to a qualified lawyer. 

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

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