Originally Posted by
Busboy
Lots of alternative facts there.
A "qualified" plan does not mean it's a guaranteed plan.
The PBGC basically
only covers "qualified" plans. Like all the bankrupt PAX carrier's plans. The non qualified portions of their plans were not covered by the PBGC. The non qualified portions were fought out in bankruptcy court with creditors and parent airline.
I'm not trying to compare risks of PAX vs Cargo carriers pensions. I'm just trying to shed a little truth about "qualified plans".
I'm thinking that "$130 til you die" is setting the bar pretty low. Even for the PBGC.
True. The main difference between a qualified and non-qualified plan is tax treatment. Qualified plans must be funded, reported, distributed, and distressed terminated in accordance with ERISA, which also established the PBGC, and applicable bankruptcy law if needed. Qualified plans must benefit employees equally where non-qualified plans can be built around specific types of employees or special circumstances. Non-qualified plans have minimal reporting requirements, receive no PBGC protection (because they are not 401(a) plans), and are often used to get around caps and limits since they are taxable funds.
Non-qualified plans do not have to be held in trusts and vary greatly with plan design. Participants find themselves in a long line of creditors when a company goes south and often get nothing. Participants in ERISA/PBGC covered plans have some significant protections, both in terms of the consideration provided in bankruptcy and the resultant financial outcomes based on the funded status of a given trust.
Pensions are still a promise to pay. Qualified pensions have some protections under ERISA and the PBGC, but nothing guarantees the level of benefits promised. The maximum benefit the PBGC offers employees of terminated plans in 2017 is $3,490.06 per month at Age 60 and $5,369.32 per month at Age 65. Maximum benefit levels are periodically increased based on a Social Security Index.