The Pension Benefit Guaranty Corporation (PBGC) announced June 1, 2009 that General Motors Corp. plans to continue its two defined benefit pension plans even though it has filed for Chapter 11 bankruptcy protection. Termination of defined benefit pension plans is a common action when companies sponsoring those plans file for Chapter 11 bankruptcy.
GM’s defined benefit plans cover more than 670,000 pension plan participants.
According to the PBGC, stakeholders in the bankruptcy, including GM, the United Auto Workers and the U.S. government, have stated their intent to maintain the plans under the sponsorship of a new corporate entity to be formed from the sale of GM’s productive assets. The PBGC announced its commitment to work with all parties to achieve that outcome.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
Individuals with questions about the PBGC and its benefit guarantees should consult the agency’s auto-sector Web page at PBGC.gov. GM workers and retirees with specific questions about their GM pension benefit should call the GM Benefits & Services Center at 1-800-489-4646.