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# Glossary

*The definitions in this glossary are simplified. Some are PBGC-specific in their usage. None of the definitions takes precedence over legislation, regulations, or specific interpretations or rulings.*

A B C D E F G H I JK L M N O P Q R S T U VW X Y Z

## A

**Accrued-At-Normal Limit (for Single-Employer Plans only) -**A limit on PBGC's guarantee that applies to temporary or supplemental early retirement pension benefits. As a result of the limit, a participant may receive less money per month than promised by the plan.

PBGC ***cannot*** guarantee any monthly amount greater than the amount the participant would have received as a straight-life annuity starting at normal retirement age.

For example, participants whose plans offer a temporary supplemental benefit in addition to an early retirement benefit often receive amounts greater than their straight-life annuity amount. The accrued-at-normal limits means that PBGC ***does not*** guarantee the portion of the monthly amount that exceeds the straight-life-annuity amount. See page 3 of PBGC's Guarantee Limits-an Update for more information.

**Accrued Monthly Benefit -**The amount that a participant has earned under the terms of a pension plan, payable as a monthly benefit starting at normal retirement age.

**Actual Retirement Date**- The annuity starting date chosen by a retiree as the first date for which payment is or was due.

**Actuary -**A business professional who assesses the financial impact of risk and uncertainty on financial systems, such as pension plans or insurance, with a focus on their complexity, mathematics, and methods.

An **enrolled actuary** is approved by the Joint Board for the Enrollment of Actuaries to perform a variety of pension actuarial services, such as determining minimum funding contributions, for a defined benefit plan.

**Alternate Payee -**A participant's spouse, former spouse, child, or other dependent who, under a Qualified Domestic Relations Order (QDRO), has a right to receive some or all of the participant's pension benefits under a pension plan. Alternate payees are considered beneficiaries.

See Qualified Domestic Relations Orders and PBGC for more information.

**Annual Funding Notice -**An annual notice of a pension plan's funding status (see Plan Funding). Federal law requires that all single-employer and multiemployer defined benefit plans subject to Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) send this notice each year to participants, beneficiaries, and certain other parties.

The notice must include, among other things, the value of the plan's assets and liabilities, the plan's funding percentage (determined by dividing the value of the plan's assets by the plan's promised pension benefits), a statement of how the plan's assets are invested, and a description of plan benefits eligible to be guaranteed by PBGC.

Receipt of the Annual Funding Notice ***does not*** mean that a person's plan is ending or that PBGC has trusteed the plan. Any questions about the plan should go to the employer or plan sponsor. See Annual Funding Notice for Defined Benefit Pension Plans and Annual Funding & Other Notices for Multiemployer Plans for more information.

**Annuitant -**A person receiving an annuity.

**Annuity -**Regular payments (usually monthly) to a person for a set period, such as for a certain number of years, or for life.

PBGC offers several types of annuities to participants in its trusteed plans. The type of annuity affects the amount of the payment and how much, if anything, a beneficiary will receive after a participant's death. For example, payment amounts typically are reduced if an annuity has a survivor feature that provides benefits to a beneficiary upon the participant's death. See Your PBGC Benefit Options for more information.

**Annuity Starting Date -**The date when the first pension benefit payment is due.

**Appeals Board (for Single-Employer Plans only) -**A PBGC board that independently reviews certain PBGC determinations (decisions), such as those relating to benefits. Participants, beneficiaries, and other eligible parties may file appeals with the board.

The Appeals Board issues final agency decisions resolving specific disputes raised in appeals. PBGC's administrative review regulation provides formal guidance for the board and explains which PBGC decisions may be appealed.

The Appeals Board cannot provide relief based on hardship or a belief that PBGC's decision is unfair. See PBGC's Appeal Board, Appealing Formal Determinations, and Your Right to Appeal for more information. See also Reconsideration.

**Assets -**See Plan Assets.

**Automatic Married Benefit Form / Automatic Unmarried Benefit Form -**The types of annuities that a pension plan automatically provides to married and unmarried participants, respectively. A participant, however, may be able to elect a different payment form.

Typically, a qualified joint-and-survivor annuity is the automatic benefit form for a married plan participant, and a single-life annuity is the automatic benefit form for an unmarried participant. See Your PBGC Benefit Options for more information.

## B

**Bankruptcy Filing Date (or Bankruptcy Petition Date) -**The date a bankruptcy case is begun by, or against, a plan sponsor of a Single-Employer Plan.

See the section "When Companies Reorganize: Bankruptcy" in the General FAQs About PBGC for more information.

**Beneficiary -**Generally, a person designated by a pension plan participant, or by the plan's terms, to receive some or all of the participant's pension benefits upon the participant's death. See Payments to Beneficiaries for more information.

An alternate payee under a Qualified Domestic Relations Order also is considered a beneficiary.

**Benefit Accrual -**The earning of a benefit or additional benefits under an ongoing pension plan. Typically, the benefit is earned through active employment service covered by the plan.

**Benefit Determination (for Single-Employer Plans only) -**PBGC's determination of a participant's or beneficiary's benefit payable by PBGC under the terms of the participant's single-employer plan and Title IV of the Employee Retirement Income Security Act of 1974 (ERISA).

**Benefit Freeze -**See Frozen Plan.

**Benefit Offset -**A partial or total reduction in a person's pension benefit because the person (1) owes money to the pension plan, or (2) is receiving (or has received) other benefits that must be subtracted based on plan terms, such as a benefit from a related pension plan or from Social Security.

**Benefit Service -**See Credited Service.

## C

**Cash Balance Plan -**A defined benefit plan that states a participant's benefit in terms of a hypothetical account balance based on a formula using pay credits and interest credits. Generally, cash balance plans are insured by PBGC.

**Certain-and-Continuous (C&C) Annuity -**An annuity that pays benefits for a set period or for a retiree's lifetime, whichever is longer. PBGC offers a 5-year, 10-year, or 15-year C&C annuity for participants in PBGC-trusteed single-employer plans.

If the retiree dies before the end of the period chosen, the designated beneficiary will receive the same monthly benefit for the rest of the period. If the retiree dies after the end of the period, benefit payments end. The 5-, 10-, or 15-year period starts when the retiree's benefit payments start, not when the retiree dies. See Your PBGC Benefit Options for more information.

**Church Plan -**Generally, a plan established and maintained for its employees by a church or a convention or association of churches which is exempt from tax under the Internal Revenue Code.

Church plans are not covered by PBGC's insurance program unless they elect to be covered. See Is My Pension Insured? to find out if PBGC insures a pension plan.

**Contribution Base Unit (CBU) (for Multiemployer Plans only) -**The unit of employee activity for which an employer has an obligation to contribute under a multiemployer plan. For example, an employer's contribution under a collective bargaining agreement may be based on a participant's hours of covered work.

**Covered Plan -**A defined benefit pension plan insured by PBGC.

**Credited Service (or Benefit Service) -**The amount of time that counts toward a participant's pension benefit. Credited service typically is the number of years the participant worked for a company while participating in the company's pension plan. For participants who worked part-time, credited service may be less than the number of years worked.

Credited service usually ends (stops increasing) when the participant retires or otherwise leaves the company, but can end sooner if the employer freezes the plan (see Frozen Plan). Credited service ends if the plan is terminated (see Termination).

## D

**Date of Plan Termination (DOPT) -**See Plan Termination Date.

**Date of Trusteeship (for Single-Employer Plans only) -**The date that PBGC takes over a terminated single-employer defined benefit plan and becomes responsible for making payments to plan participants and beneficiaries.

**Deferred Vested Participant -**Generally, an employee who worked long enough to earn vested benefits in a pension plan, but who is no longer accruing pension benefits and is not yet receiving a retirement benefit. (See also Terminated Vested Participant.)

Such a participant can receive benefit payments from the plan once he or she reaches the plan's normal retirement age or, if the plan allows, the plan's early retirement age.

**Defined Benefit Plan -**A pension plan that promises participants a specified benefit, usually a monthly amount, at retirement. Typically, the benefit is based on some combination of the participant's years of credited service, salary, and age.

PBGC insures most defined benefit plans sponsored by private (non-governmental) employers.

**Defined Contribution Plan -**A plan in which an employee and/or employer makes contributions to the employee's individual plan account. Each participant's retirement benefits are based on the amount in that person's own account, including investment gains and losses and plan expenses.

Common types of defined contribution plans are profit-sharing plans, 401(k) plans, employee stock ownership plans (ESOPs), thrift savings plans, and money purchase plans. PBGC does ***not*** insure defined contribution plans.

**Department of Labor (DOL) -**The U.S. Department of Labor. The Employee Benefits Security Administration of the DOL shares administration and enforcement of the federal pension law—the Employee Retirement Income Security Act—with PBGC and the Internal Revenue Service of the U.S. Department of the Treasury.

The Secretary of Labor serves as Chair of PBGC's Board of Directors.

**De-Risking**- See Risk-Transfer Event.

**Disability Benefit -**A benefit paid by some pension plans to participants who become disabled while employed.

For ***single-employer plans***, PBGC guarantees a participant's disability benefit, subject to legal limits, if the participant's plan provides such a benefit and the participant became entitled to that benefit on or before the plan termination date or the bankruptcy filing date, as applicable. (To learn which date applies, see "Are there any special rules if my plan ends in bankruptcy?" in the General FAQs About PBGC.) See Guarantees for Disabled Participants in Single-Employer Plans for more information.

For ***multiemployer plans***, PBGC guarantees a participant's disability benefit, subject to legal limits, if the participant's plan provides such a benefit and the participant became entitled to that benefit before the plan terminated.

**Distress Termination (for Single-Employer Plans only) -**A termination of a single-employer defined benefit plan that an employer requests when it is in financial distress and the plan does not have enough assets to pay all benefits that have been earned under the plan.

The plan administrator must notify participants and PBGC before the proposed termination, as well as take other required actions. Generally, the employer must prove to PBGC or to a court that it cannot remain in business unless the plan ends. See Distress Terminations for more information.

**DOL -**See Department of Labor.

**Domestic Relations Order -**Any judgment, decree, or order (including approval of a property settlement agreement) that (1) provides child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and (2) is made pursuant to a state's domestic relations law (including a community property law).

A domestic relations order must be qualified before it can take effect. See Qualified Domestic Relations Order.

## E

**Earliest PBGC Retirement Date (EPRD) (for Single-Employer Plans only) -**The earliest date that PBGC can start paying benefits to a participant in a PBGC-trusteed single-employer plan. In most cases, the date will be age 55 or older.

A participant's EPRD can be no earlier than age 55 unless PBGC determines that participants typically retire under the plan earlier than age 55. For example, in some plans participants typically retire under a '30-and-out' benefit, which allows participants to retire after 30 years of service regardless of age.

A participant's EPRD is *later* than age 55 if the participant could not receive an annuity benefit until a later age under the plan.

**Early Retirement Age** - In some pension plans, the age at which a participant can first receive benefits before the participant's normal retirement age. Benefits are usually reduced for an early retirement, but some plans partially or fully subsidize these benefits - see Subsidized Early Retirement Benefit.

In PBGC-trusteed single-employer plans, PBGC ***cannot*** recognize an early retirement age that is earlier than the participant's age as of his or her earliest PBGC retirement date (EPRD).

**Early Retirement Benefit -**A pension benefit that begins before the plan's normal retirement date.

Plans that offer this benefit typically reduce the monthly amount of the benefit to reflect the longer expected payout over a person's life, but some plans do not reduce the monthly amount - see Subsidized Early Retirement Benefit.

**Early Unreduced Retirement Benefit -**An early retirement benefit that is not reduced from the amount payable at the normal retirement date.  See Subsidized Early Retirement Benefit.

**EBSA -**The Employee Benefits Security Administration, an agency of the U.S. Department of Labor. EBSA shares administration and enforcement of the federal pension law—the Employee Retirement Income Security Act—with PBGC and the Internal Revenue Service of the U.S. Department of the Treasury.

**Employee Retirement Income Security Act of 1974 (ERISA)** - The federal law that establishes the basic requirements for employee benefit plans.

The authority for administering and enforcing ERISA is divided among three federal agencies - the Internal Revenue Service of the U.S. Department of the Treasury, the Employee Benefits Security Administration of the U.S. Department of Labor, and PBGC.

**Estimated Benefit (for Single-Employer Plans only) -**For a PBGC-trusteed single-employer plan, benefit payments made by PBGC or a plan administrator on or after the plan termination date and before PBGC determines the final benefit amount.

The estimated benefit amount cannot be appealed. PBGC tells participants and beneficiaries their final benefit amount in a benefit determination letter. PBGC's determination of the final benefit amount, which may be different than the estimated benefit, can be appealed - see Appeals Board.

## F

**4022(c) Benefit (for Single-Employer Plans only) -**For a PBGC-trusteed single-employer plan, a benefit payable by PBGC to a participant on account of PBGC's recoveries of unfunded benefit liabilities.

In most cases, PBGC asserts claims against the plan sponsor and other liable entities on behalf of the plan for unfunded benefit liabilities. These are amounts owed to participants, but are not funded by the plan's assets. A participant's ERISA section 4022(c) benefit depends on (1) the amount of PBGC's recoveries, (2) whether a participant has a nonguaranteed benefit, and (3) the priority categories process.

For plans with large underfunding amounts (that is, greater than $20 million of the plan's benefits are neither guaranteed nor funded by plan assets), the amount available for distribution under 4022(c) is based on PBGC's recoveries, if any, specific to the plan. For other plans, the amount available for distribution is based on a rolling five-year average of recoveries that includes all PBGC-trusteed plans.

**Facilitated Merger -**PBGC has the authority under current law to provide financial assistance to help a critical and declining status plan merge with a healthier plan to give the troubled plan a chance to remain solvent.

**Fiduciary -**Generally, any person or organization with control over a pension plan or its assets. Plan fiduciaries typically include plan trustees, plan administrators, and members of a plan's investment committee.

See DOL's Meeting Your Fiduciary Responsibilities and ERISA Fiduciary Advisor for more information.

**Final Benefit (for Single-Employer Plans only) -**For a PBGC-trusteed single-employer plan, benefit payments made by PBGC after PBGC makes its formal determination of the amount a payee is entitled to receive.

PBGC tells participants and beneficiaries their final benefit amount in a benefit determination letter. PBGC's formal determination of the benefit amount, which may be different than the estimated benefit, can be appealed. See also Benefit Determination, Estimated Benefit and Appeals Board.

**Financial Assistance (for Multiemployer Plans only) -**Under PBGC's multiemployer insurance program, a PBGC loan provided to a multiemployer plan that is insolvent. A plan is insolvent when it runs out of money and is unable to pay benefits guaranteed by PBGC when due.

PBGC's loan allows the plan to pay benefits at the level guaranteed under ERISA, and to pay for the plan's reasonable administrative expenses. See also Termination (for Multiemployer Plans).

**Flat-Rate Premium -**The fixed premium rate that all PBGC-insured plans pay annually to PBGC for each participant. The rate is higher for single-employer plans than for multiemployer plans. See Premium Rates for more information.

Single-employer plans also may owe a variable-rate premium depending on the plan's funding level.

**Floor Offset -**A retirement plan design where an employer maintains two plans:

     (1) a defined contribution plan that serves as the primary fund for a participant's retirement benefits, and

     (2) a defined benefit plan that uses a benefit formula to establish the participant's minimum monthly benefit (the "floor benefit").

Plans determine what a participant's monthly benefit payment would be if the participant's individual account balance in the defined contribution plan were used to purchase an annuity at retirement, based on standard assumptions for interest rates and the participant's life expectancy.

If the participant's individual account produces a monthly benefit amount bigger than the floor benefit, the participant gets the bigger benefit. If the individual account produces a monthly amount less than the floor benefit, the defined benefit plan makes up the shortfall. PBGC insures the defined benefit plan.

**FOIA (Freedom of Information Act) -**The federal law that provides that any person has the right to request access to federal agency records. See PBGC's Freedom of Information Act Guide for more information.

**Form 5500 -**The annual return/report that a pension plan must file with the Department of Labor's Employee Benefits Security Administration to provide information about the plan's financial condition, investments, and operations. See DOL's Form 5500 website for more information.

**Free Surviving Spouse Benefit (FSSB) (for Single-Employer Plans only) -**A survivor benefit provided by some plans without any cost (reduction) to the participant's benefit.

Typically, a FSSB pays a surviving spouse 50% of the participant's benefit until the surviving spouse reaches a specified age, most commonly age 60. At that time, the surviving spouse's FSSB is reduced substantially based on his or her Social Security widower's benefit.  

**Frozen Plan -**An ongoing pension plan in which the plan sponsor "freezes" benefits, that is, stops some or all future benefit accruals.

A plan can be frozen in several ways. Under a partial freeze, a plan can be frozen for some, but not all, current participants based on, for example, years of service, job classification, or plant location. Under a soft freeze, benefits typically are increased for wage growth, but not for additional service. Under a hard freeze, no participant accumulates any further benefit accruals.

Most frozen plans are closed to new entrants. A plan can be closed to new participants without restricting future benefit accruals of participants already in the plan. Generally, such closures also are viewed as a type of plan freeze. See PBGC's studies on *Hard Frozen Defined Benefit Plans* (2008) and *Single-Employer DB Plan Freezes*(2013)**for more information.

**Fully Funded Plan -**For PBGC purposes, a defined benefit plan with enough assets to pay all benefits that have been earned under the plan, whether or not the benefits are guaranteed by PBGC.

A plan's funded status can vary depending on the method used to value the plan's assets and liabilities. See also Underfunded Plan.

**Funding -**See Plan Funding.

## G

**Governmental Plan****-**Generally, a plan established or maintained for its employees by the U.S. government, a state or local government, or other governmental entities.

Governmental plans are ***not*** covered by PBGC's insurance program.

**Guaranteed Benefit -**The amount of a participant's pension benefit that PBGC guarantees based on ERISA's legal limits. The benefits that PBGC may guarantee include pension benefits payable at normal retirement age; certain early retirement benefits and disability benefits; and annuity benefits for survivors of participants.

The guarantees for single-employer plans and multiemployer plans are different.

***Single-Employer Plans***

PBGC's single-employer plan guarantee applies only to benefits earned on or before the plan termination date or the bankruptcy filing date, as applicable. (To learn which date applies, see "Are there any special rules if my plan ends in bankruptcy?" in the General FAQs About PBGC.)

The single-employer plan guarantee is subject to several legal limits, including the maximum guaranteed benefit, the accrued-at-normal limit, and the phase-in limit. See PBGC's Guarantees for Single-Employer Pension Plans Fact Sheet for more information.

***Multiemployer Plans***

PBGC's multiemployer plan guarantee applies only to benefits earned before the plan terminated. See Termination (for Multiemployer Plans).

The multiemployer plan guarantee is subject to several legal limits, including the multiemployer guarantee, the phase-in limit, and a limit that is similar to the accrued-at-normal limit. See Multiemployer Benefit Guarantees for more information.

## H

**Health Coverage Tax Credit (HCTC) -**A tax credit that may be available to certain PBGC-benefit recipients if they are age 55 or older and are covered by qualified health insurance. The HCTC program is administered by the IRS.

See Health Coverage Tax Credit (HCTC) FAQs for more information.

## I

**Insolvency (for Multiemployer Plans only) -**A multiemployer plan that has run out of money and is unable to pay benefits guaranteed by PBGC which are due during the plan year.

See also Notice of Insolvency and Notice of Insolvency Benefit Level.

**Insured Plan -**A pension plan covered by PBGC's Single-Employer Pension Plan Insurance Program or Multiemployer Pension Plan Insurance Program.

**Involuntary Termination -**See PBGC-Initiated Termination.

**IRA (Individual Retirement Account) -**An individual account that is meant for retirement and set up with a financial institution, such as a bank or mutual fund company. Under federal law, individuals may contribute funds annually to an IRA, up to a certain amount. Individuals may receive tax deductions for IRA contributions and tax deferral on the contributions' earnings.

Participants in a defined contribution plan can transfer ("roll over") money from an employer-sponsored retirement plan to an IRA when leaving an employer. If a participant is eligible to receive a lump sum from a defined benefit plan or PBGC, the participant can transfer all or part of the lump sum into an IRA or other qualified plan. See Lump Sums from PBGC for more information.

IRAs are ***not*** insured by PBGC and are under the jurisdiction of the U.S. Department of the Treasury.

**IRS -**The Internal Revenue Service, a part of the U.S. Department of the Treasury. The IRS shares administration and enforcement of the federal pension law—the Employee Retirement Income Security Act—with PBGC and the Employee Benefits Security Administration of the U.S. Department of Labor.

## J

**Joint-and-Survivor (J&S) Annuity-**An annuity that typically pays a participant a fixed monthly amount for life and, after the participant dies, continues payments to the participant's spouse or other designated beneficiary for the rest of the beneficiary's life. The beneficiary's monthly benefit typically is 50%, 75% or 100% of the participant's monthly benefit.

If the beneficiary dies before the participant and payments have already started, the participant's monthly benefit usually will not change and the participant typically cannot name a new beneficiary. Certain J&S choices require spousal consent. See Surviving Spouse and Your PBGC Benefit Options for more information.

**Joint-and-Survivor 'Pop-Up' Annuity -**An annuity that, unlike the typical form of a joint-and-survivor annuity, increases ("pops up") the participant's monthly benefit to the straight-life annuity amount for the rest of the participant's life if the beneficiary dies before the participant.

See Your PBGC Benefit Options for more information.

## K

**Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) -**Under this law, Congress established a new process for multiemployer pension plans to propose a temporary or permanent reduction of pension benefits. A plan may propose a reduction if it is projected to run out of money before paying all promised pension benefits. Congress further authorized PBGC to provide financial assistance to such plans through partitions and mergers.

See Multiemployer Pension Reform Act of 2014 FAQs, Multiemployer Plans and Partition, and PBGC Proposes Rule to Facilitate Mergers of Multiemployer Pension Plans for more information.

## L

**Lost Pension -**See Unclaimed Pension.

**Lump-Sum -**A form of payment in which the entire value of a pension benefit is paid in a single payment, rather than as an annuity.

See Lump Sums from PBGC for more information.

## M

**Majority Owner -**Generally, a person who, within the five-year period before the plan termination date:
                          - in an unincorporated trade or business, owns the entire interest;
                          - in a partnership, is a partner who owns, directly or indirectly, 50% or more of either the capital interest or profits interest in such partnership; or
                          - in a corporation, owns, directly or indirectly, 50% or more in value of either the voting stock of the corporation or all of the stock of the corporation.

**Mandatory Employee Contributions -**Money that participants must contribute to a defined benefit plan as a condition of employment or plan participation, or to get employer-funded plan benefits. See also Voluntary Employee Contributions.

**Maximum Guaranteed Benefit (for Single-Employer Plans only) -**The largest benefit amount that PBGC can guarantee by law. Generally, the maximum guarantee for a single-employer defined benefit plan is fixed as of the plan termination date. However, if a plan ends during a plan sponsor's bankruptcy that began on or after September 16, 2006, the maximum guarantee is fixed as of the bankruptcy filing date.

For participants already retired, the maximum guaranteed benefit is based, in part, on the retiree's age on the plan termination date or bankruptcy filing date, as applicable. For participants not yet retired, the maximum is based, in part, on the participant's age when he or she retires. The participant's maximum guaranteed benefit also is adjusted to reflect whether the form of benefit includes a survivor benefit.

See PBGC's Guarantees for Single-Employer Pension Plans Fact Sheet and the Maximum Monthly Guarantee Tables for more information about limits on PBGC's guarantee. For multiemployer plans, see Multiemployer Guarantee.

**Minimum Funding Contribution -**The minimum amount that must be paid into a defined benefit plan for a particular year as required by ERISA. Employer contributions are used to fund new benefit accruals for that year and reduce any unfunded past liabilities.

For a PBGC-trusteed single-employer plan, **Due and Unpaid Employer Contributions (DUEC)** are the unpaid amount of minimum funding contributions, with appropriate interest, that was due to the plan for the period before the plan termination date.

In most cases, PBGC asserts a claim against the plan sponsor and other liable entities for these funds on behalf of the plan. DUEC recoveries are treated as a plan asset and pass through the priority categories process.

For plans with large underfunding amounts (that is, greater than $20 million of the plan's benefits are neither guaranteed nor funded by plan assets), the DUEC available for distribution through the priority categories process is based on PBGC's recoveries, if any, specific to the plan. For other plans, the amount available for distribution is based on a rolling five-year average of recoveries that includes all PBGC-trusteed plans.

**Missing Participants Program (for Single-Employer Plans only) -**A PBGC program for locating missing participants in terminated single-employer defined benefit plans.For more information see Find an Unclaimed Pension.

See Missing Participants for more information about a plan sponsor's duties when terminating a plan with missing participants.

**Multiemployer Guarantee -**When a multiemployer pension plan fails, PBGC provides financial assistance in the form of a loan to the plan. PBGC provides funds to make up the difference between the plan's assets and the amount needed to make benefit payments up to the statutory limit, referred to as the "multiemployer guarantee limit."

The multiemployer guarantee limit varies based on how many years each affected employee worked and the rate at which benefits were earned. See Multiemployer Benefit Guarantees for more information.

**Multiemployer Pension Plan Insurance Program -**A PBGC insurance program that covers private (non-governmental) multiemployer defined benefit plans. The Multiemployer Program is separate from PBGC's Single-Employer Pension Plan Insurance Program.

**Multiemployer Pension Reform Act of 2014 (MPRA) -**See Kline-Miller Multiemployer Pension Reform Act of 2014.

**Multiemployer Plan -**Generally, a collectively bargained pension plan maintained by more than one unrelated employer, usually within the same or related industries, and one or more labor unions.

Multiemployer plans provide pension portability, allowing participants to accumulate benefits earned for service with different employers throughout their careers. See Introduction to Multiemployer Plans, Multiemployer Insurance Program Facts, and PBGC's Multiemployer Program for more information.

**Multiple Employer Plan -**See Single-Employer Plan.

**My PAA -**My Plan Administration Account, the PBGC's secure online application through which plan administrators, plan sponsors or pension practitioners must electronically submit annual premium filings and payments to PBGC. See Online Premium Filing (My PAA) for more information.

**MyPBA (for Single-Employer Plans only) -**My Pension Benefit Account, the PBGC's secure online application that allows participants and beneficiaries in PBGC-trusteed single-employer plans to update their personal information and perform benefit-related transactions with PBGC.

See Online Transactions: My Pension Benefit Access (MyPBA) FAQs for more information.

## N

**Nonguaranteed Benefit -**A pension benefit that is not guaranteed by PBGC.

For single-employer plans, PBGC pays some or all nonguaranteed pension benefits to a participant only if there are sufficient plan assets or PBGC recoveries to pay for them under the priority categories process.

**Normal Married Form / Normal Single Form -**See Automatic Married / Unmarried Benefit Form.

**Normal Retirement Age (NRA) -**An age defined in every pension plan. The age cannot be greater than the later of (1) age 65 or (2) the participant's age at his or her fifth anniversary of participation in the plan.

The plan's normal retirement date is based on the normal retirement age.

**Normal Retirement Date -**The date when a participant may begin receiving normal retirement benefits under a pension plan. Typically, this is the first day of the month on or after the month that the participant reaches normal retirement age.

**Notice of Determination (NOD) (for Single-Employer Plans only) -**The notice that PBGC issues to a plan administrator when PBGC determines that a single-employer plan should or must be terminated based on certain tests under ERISA. See also PBGC-Initiated Termination.

**Notice of Intent to Terminate (NOIT) (for Single-Employer Plans only) -**The notice, required by ERISA, that a single-employer plan must provide to (1) participants, (2) PBGC, and (3) certain other parties, when the plan administrator proposes a standard or distress termination.

**Notice of Insolvency (for Multiemployer Plans only) -**The notice, required by ERISA, that a multiemployer plan must provide to (1) participants, (2) PBGC, and (3) certain other parties, when the plan has, or expects to, run out of money for a plan year or years. This means that the plan will need financial assistance from PBGC to pay benefits and expenses.

Plan benefits higher than the PBGC guarantee will need to be reduced to PBGC-guaranteed levels.

See Multiemployer Plan Insolvency and Benefit Payments and Multiemployer Benefit Guarantees for more information.

**Notice of Insolvency Benefit Level (for Multiemployer Plans only) -**The notice, required by ERISA, that a multiemployer plan must provide to (1) participants, (2) PBGC, and (3) certain other parties, when the plan has, or expects to, run out of money for a plan year.

The plan sends this letter to participants receiving, or about to receive, benefits. The letter may come at the same time as the notice of insolvency. It includes a participant's current monthly benefit payment and the monthly benefit payment a participant can expect to receive in the coming plan year due to the plan's insolvency.

See Multiemployer Plan Insolvency and Benefit Payments for more information.

## O

**Offset -**See Benefit Offset, Floor Offset, Offset Plan, and Social Security Offset Plan.

**Offset Plan -**A type of plan where a person's pension benefit is offset (reduced) under the terms of the plan by all or part of (1) the person's Social Security benefits, (2) the person's benefits from another plan, or (3) other amounts.

**Ongoing Plan -**A defined benefit plan that has not been terminated (see Termination). The plan sponsor of an ongoing plan is responsible for maintaining the plan and making benefit payments.

PBGC does ***not*** have information about individual plan participants or their benefits for ongoing plans.

## P

**Participant -**A person who is earning or retaining a pension benefit under a pension plan, whether or not the person is currently working for the employer.

**Payee -**For PBGC purposes,****someone in a PBGC-trusteed single-employer plan who is receiving benefit payments from PBGC, including participants and beneficiaries.

**PBGC -**The Pension Benefit Guaranty Corporation, the federal government agency that insures private defined benefit plans. See Who We Are for more information.

**PBGC-Initiated Termination (for Single-Employer Plans only) -**A termination started by PBGC of a single-employer defined benefit plan, even if a company has not filed to end the plan on its own initiative.

PBGC ***may*** seek a plan's termination to protect the interests of participants or the pension insurance program. PBGC ***must*** begin terminating any plan that does not have enough money to pay benefits currently due. See PBGC-Initiated Terminations and Plan Termination Fact Sheet for more information.

**PBGC (or Termination) Benefit -**The PBGC-guaranteed benefit plus, for single-employer plans, any additional benefit provided through the priority categories process.

**PBGC-Trusteed Single-Employer Plan -**A single-employer defined benefit plan for which PBGC has assumed responsibility. PBGC is responsible for calculating and paying pension benefits of trusteed plans.

Under ERISA, PBGC may be required to reduce pension benefits to guaranteed levels.

**Pension Benefit -**A retirement benefit payable under a pension plan to a participant or the participant's beneficiary.

**Pension Plan -**Generally, any plan, fund, or program that an employer and/or employee organization establishes or maintains to provide retirement income to employees.

**Pension Search Program -**See Missing Participants Program.

**Phase-In Limit -**A limit on PBGC's guarantee of new benefits and recent benefit increases added under a defined benefit plan.

Different phase-in limits apply to single-employer plans and multiemployer plans.

For **s*****ingle-employer plans***, the limit applies to new benefits and benefit increases added to the plan less than five years before the plan termination date or the bankruptcy filing date, as applicable. (To learn which date applies, see "Are there any special rules if my plan ends in bankruptcy?" in the General FAQs About PBGC.) For each full year the increase was in effect after the later of its adoption date or effective date, PBGC guarantees 20 percent of the increase or $20 per month, whichever is greater, up to the amount of the actual increase. See PBGC's Guarantees for Single-Employer Pension Plans Fact Sheet for more information.

For ***multiemployer plans***, a benefit or benefit increase that has been in effect under a plan for less than five years (60 months) is not eligible for PBGC's multiemployer guarantee. Months are not counted if the plan was insolvent or terminated. See Multiemployer Guarantees for more information.

**Plan Administrator -**The person or entity responsible for running the pension plan. Typically, the plan administrator is identified in the plan document. If the document does not name an administrator, the plan sponsor is the administrator.

**Plan Assets -**Cash, stocks, bonds, real estate, or other property held by a plan.

**Plan Document -**A written document that establishes a pension plan and governs its operations. See also Summary Plan Description.

**Plan Funding -**The money that an employer contributes to a pension plan. Typically, the plan uses some of the money to buy other assets. The assets are held in a trust (or, in some cases, in insurance contracts) to cover a plan's expenses and liabilities, such as monthly annuity payments and single lump-sum payments to retirees.

ERISA requires employers to fund their pension obligations by making minimum funding contributions.

**Plan Sponsor (Multiemployer Plan) -**Typically, the plan's joint board of trustees is the plan sponsor. If there is no joint board of trustees or other designated entity, then the plan administrator is the plan sponsor.

**Plan Sponsor (Single-Employer Plan) -**An employer that establishes or maintains a pension plan for its employees.

**Plan Termination Date (or Date of Plan Termination) -**The date a single-employer defined benefit plan ends.

**Plan Year -**The calendar year or other fiscal year on which a pension plan's records are based.

**Power of Attorney (POA) -**A document used by a person to authorize one or more other persons to represent him or her in taking specified actions. For PBGC purposes, such actions include applying for pension benefits or responding to PBGC's request for information or documents.

PBGC ***cannot*** pay a "finder's fee" or any other fee to a representative, and a person is ***not*** required to use a representative to act on his or her behalf with PBGC. See PBGC's Designate Power of Attorney and POA Form and Instructions for more information.

**Practitioner -**A professional who administers a pension plan or consults on its administration. Practitioners include third-party administrators, benefits specialists, consultants, accountants, actuaries, attorneys, and others who deal with pension plans.

**Premium Filer -**A plan administrator, plan sponsor, or pension practitioner who submits premium filings and associated payments to PBGC for PBGC-insured pension plans.

**Premiums -**Required annual payments due to PBGC from PBGC-insured defined benefit pension plans. Premium rates are set under ERISA.

Single-employer plans and multiemployer plans pay different rates. For ***single-employer plans***, the employer that sponsors the defined benefit pension plan, or the plan administrator, is required to pay the annual premium. For ***multiemployer plans***, the plan administrator is required to pay the annual premium.

See Flat-Rate Premium, Variable-Rate Premium, Termination Premium, and Premium Rates for more information.

**Present Value -**Generally, the value as of a specific date of an amount or series of amounts payable in the future. PBGC uses the plan termination date when calculating the present value of pension benefits owed to participants in a PBGC-trusteed single-employer plan.

Present value is determined by discounting (reducing) the future amounts payable based on specified (i) interest factors and (ii) probabilities that the amounts will be paid. PBGC uses an expected retirement date for future payments to start if they have not already started by the plan termination date. Ongoing pension plans may calculate present value using considerations such as an expected age of death or a probability of disability for the plan participants.

The interest factors and probabilities take into account the time value of making a payment or payments in the future. Money available now is worth more than the same amount(s) payable in the future because (i) the money on hand could be earning interest and (ii) there is a probability that a future payment will not need to be paid.

For example, the present value of $100 that will for certain be paid one year in the future is about $91 now assuming a 10% discount rate. This is because $91 now would earn about $9 ($91 x 0.10) over the one-year period. If payment of the $100 is not a certainty, the present value of $91 would be further discounted.

**Priority Categories (for Single-Employer Plans only) -**Under ERISA, participants' pension benefits in PBGC-trusteed single-employer plans are assigned to six categories (referred to as Priority Category 1, Priority Category 2, etc.).

The plan's available assets (and a portion of PBGC's recoveries - see 4022(c) Benefit) are then matched up with the benefits in the priority categories to determine if PBGC can pay any benefits that it does not guarantee to a participant. See Priority Categories for more information.

**Professional Service Employer -**Generally, any business organization owned or controlled by professionals (for example, doctors, attorneys, or architects) whose principal occupation is the performance of professional services. 

PBGC's insurance program does ***not*** cover a defined benefit plan of a professional service employer if the plan has never had more than 25 active participants at any one time after the enactment of ERISA.

**Prohibited Transaction -**Any financial transaction that involves a plan's assets that is specifically prohibited by ERISA. Generally, prohibited transactions involve transactions between the plan and a prohibited party, known as a party in interest.

A party in interest is someone directly or indirectly related to the plan such as the employer, plan fiduciaries, corporate officers, etc. See the Department of Labor's Meeting Your Fiduciary Responsibilities (pg. 6) for more information.

## Q

**Qualified Domestic Relations Order (QDRO) -**A domestic relations order that meets certain legal and procedural requirements, as determined by the plan administrator or, if applicable, PBGC.

This determination ("qualification") gives an alternate payee the right to receive some or all of the benefits payable under a plan, including survivor benefits. A domestic relations order must be qualified before any rights under the order can be enforced against the plan or PBGC. See Qualified Domestic Relations Orders & PBGC for more information.

**Qualified Joint-and-Survivor Annuity (QJSA) -**A joint-and-survivor annuity that meets certain legal requirements and provides a monthly survivor benefit equal to at least 50% of the amount payable to the participant. The main difference between a QJSA and a general joint-and-survivor annuity J&S) is that a QJSA beneficiary can only be the participant's spouse (or former spouse under a QDRO), while a J&S beneficiary can be anyone designated by the participant.

Under ERISA, a QJSA is the automatic benefit form for a married plan participant except where the total value of the benefit is $5,000 or less. A participant may waive a QJSA only with spousal consent. See Surviving Spouse and Payments to Beneficiaries for more information.

**Qualified Plan -**Any retirement plan that meets the applicable requirements of the Internal Revenue Code for tax-favored treatment.

**Qualified Preretirement Survivor Annuity (QPSA) -**An annuity paid to a surviving spouse (or former spouse under a QDRO) when a participant with vested benefits dies ***before*** starting to receive benefit payments. The annuity is paid for the life of the surviving spouse based on the benefit that the participant earned before death. A QPSA typically pays an amount equal to the survivor's portion of the QJSA.

Under ERISA, a QPSA must be provided to the surviving spouse of a married participant except where the total value of the benefit is $5,000 or less. A participant may waive QPSA coverage only with spousal consent. Plans may reduce future benefits to cover the projected expense of providing a QPSA. PBGC, however, does ***not*** reduce future benefits for QPSA coverage, and PBGC does ***not*** allow participants to waive the QPSA.

The spouse can begin receiving a QPSA benefit as early as the date the participant would have been eligible to receive a benefit from PBGC. See Payments to Beneficiaries and Earliest PBGC Retirement Date for more information.

## R

**Reconsideration (for Single-Employer Plans only) -**The process of seeking review of certain PBGC decisions by a higher level official. Reconsideration applies to decisions that are not reviewed by the Appeals Board, such as penalty assessments. PBGC's administrative review regulation explains which decisions are eligible for reconsideration.

See also Appeals Board.

**Recoupment (for Single-Employer Plans only) -**The method that PBGC uses to seek repayment of a benefit overpayment when a participant or beneficiary is receiving annuity benefits from PBGC.

When PBGC first takes over a plan, it pays estimated benefits to retirees until it determines each plan participant's benefit entitlement under Title IV of ERISA. See Benefit Determination and If You Are Already Receiving Benefits for more information.

If estimated benefit payments were more than the benefit as determined by PBGC, future benefit payments will be reduced by a percentage-typically no more than 10%-until repayment is complete. PBGC does not charge interest if a participant receives more than allowed by law. See also Recovery.

**Recovery (for Single-Employer Plans only) -**The method that PBGC uses to seek direct repayment of a benefit overpayment, typically when a participant or beneficiary is not entitled to annuity benefits from which PBGC could recoup the overpayment.

See also Recoupment.

**Reportable Event (for Single-Employer Plans only) -**An event that may indicate problems with a plan or a business of the plan sponsor.

Under ERISA, plan administrators or sponsors of defined benefit plans covered by PBGC's Single-Employer Pension Plan Insurance Program must notify PBGC of certain events, such as a missed minimum funding contribution or a bankruptcy filing.

Reportable events must be reported within 30 days after their occurrence or, in some cases, 30 days in advance. See Reportable Events and Large Unpaid Contributions for more information.

**Required Beginning Date -**The date by which a qualified retirement plan must begin to distribute a participant’s plan benefits. In general, the required beginning date is April 1 of the calendar year following the **later** of:
                          - The calendar year in which the employee attains age 72 (age 701⁄2 for a participant who attained age 701⁄2 before January 1, 2020), and
                          - The calendar year in which the participant terminates employment.

For more information about the required beginning date for benefits paid from plans that PBGC takes over as trustee, go to Your PBGC Benefit Options.

**Retiree -**A pension plan participant who has begun collecting benefits from the plan or from PBGC.

**Risk-Transfer Event -**An action by a company to eliminate or reduce its pension benefit obligations. In some cases, a plan sponsor asks participants in a retirement plan to choose between receiving an annuity in the future or a single lump-sum payment immediately. Typically, for participants who turn down a lump sum, the plan sponsor buys an annuity from an insurance company to replace the company pension.

If a participant is able to choose a lump-sum payment and does so, the participant takes on certain risks, such as longevity risk (outliving one's money) and investment risk (how to invest the money).

This choice also may be called de-risking. See Choose: Annuity or Lump Sum? for more information.

**Rollover -**A tax-free transfer of a participant's benefit from one retirement plan to another. Participants may roll over certain payouts from a qualified plan or PBGC into an IRA or another qualified plan.

## S

**Shutdown Benefit (for Single-Employer Plans only) -**An early retirement benefit offered by a plan that becomes payable when all or substantially all of an employer's operations at a facility end, resulting in a loss of jobs that is expected to be permanent for all or substantially all of the employees at that facility who are plan participants. The plan may also have other eligibility requirements.

A shutdown benefit based on an event that occurs after July 26, 2005, is subject to a special phase-in limit that phases in the benefit increase from the date of the event.

See also Unpredictable Contingent Event Benefit.

**Single-Employer Pension Plan Insurance Program -**A PBGC insurance program that covers private (non-governmental) single-employer defined benefit plans. The Single-Employer Program is separate from PBGC's Multiemployer Pension Plan Insurance Program.

See PBGC's Two Pension Insurance Programs: Single-Employer and Multiemployer for more information.

**Single-Employer Plan -**Generally, a pension plan sponsored by one company or a group of companies under common ownership. It may or may not be collectively bargained.

A **multiple employer plan** is a type of single-employer plan that is maintained by two or more unrelated companies and does not meet the requirements of a multiemployer plan.

**Single-Life Annuity -**An annuity that pays benefits based on the age and other characteristics of only one person.

Examples include annuities that will pay only one person (see Straight-Life Annuity), and annuities that in some cases pay a surviving beneficiary after the person dies (see Certain-and-Continuous Annuity). See Your PBGC Benefit Options for more information.

**Social Security Leveling Option -**An optional type of pension benefit in some plans that provides higher monthly payments to retirees before a specified age (for example, before age 62 or 65) and lower payments thereafter.

The combination of a retiree's pension benefit payments and Social Security benefits produces a more level combined income stream than a typical annuity does. That is, the monthly pension and Social Security payments after the specified age should be approximately the same amount as the pension payments before the specified age.

**Social Security Offset Plan -**A pension plan that reduces a participant's pension benefit by the amount, or an estimated amount, of Social Security benefits payable to the participant from the Social Security Administration (see Benefit Offset).

Typically, the pension benefit is offset or reduced by either: (1) the amount of Social Security benefit the participant would receive at Social Security Normal Retirement Age (this amount is known as the "primary insurance amount"), or (2) the amount of Social Security benefit the participant would receive at an age or date specified by the plan.

**Spousal Consent -**A spouse's written and notarized agreement that allows the participant to waive the qualified preretirement survivor annuity or elect a form of benefit other than a qualified joint-and-survivor annuity.

**Spouse -**Husband or wife as determined under applicable law. See also Surviving Spouse.

**Standard Termination (for Single-Employer Plans only) -**An employer-initiated termination of a single-employer defined benefit plan that has enough assets to pay all plan benefits.

The plan administrator must notify participants and PBGC before the proposed termination, as well as take other required actions. See Standard Terminations for more information.

**Straight-Life Annuity -**An annuity that pays benefits, typically monthly, for one person's life, with no survivor benefits after that person dies. See Your PBGC Benefit Options for more information.

**Subsidized Early Retirement Benefit -**A benefit amount that is not reduced, or is reduced less than the full actuarial amount, for retirement before normal retirement age.

Typically, plans reduce the monthly amount of an early retirement benefit to reflect the longer expected payout over a person's life. Some plans, however, fully or partially subsidize an early retirement benefit.

For example, a benefit is fully subsidized if a plan pays a participant the same amount per month starting at early retirement age (age 55, for example) that the plan would pay the participant starting at normal retirement age (age 65, for example).

**Summary Plan Description (SPD) -**A document that a plan administrator must provide to plan participants (and beneficiaries receiving benefits) that describes important features of the pension plan in plain language. The SPD includes information on when employees begin to participate in the plan, how service and benefits are calculated, when benefits become vested, when and in what form participants may receive benefit payments, and how to file a claim for benefits.

The administrator must inform participants of major changes to the plan either through a revised SPD or in a separate document called a Summary of Material Modifications.

The SPD is not the same as the plan document. If the features of the plan as described in the SPD differ from those in the plan document, the plan document language is controlling.

**Supplemental Benefits -**Temporary payments made by a plan in addition to a participant's lifetime early retirement benefit. A plan may offer temporary payments from the participant's early retirement age to a specified age, such as age 62 (when a participant becomes eligible for Social Security) or normal retirement age.

PBGC may ***not*** fully guarantee supplemental benefits, typically due to the accrued-at-normal limit, but also due to other legal limits.

**Surviving Spouse -**The living spouse of a deceased participant. Usually the surviving spouse for purposes of a pension plan is the individual to whom the participant was married when benefit payments began.

A few plans allow retirees to change the designated beneficiary of a joint-and-survivor annuity under certain circumstances. However, PBGC does ***not*** permit such changes after the plan termination date.

A QDRO may provide that a participant's former spouse is to be treated as a surviving spouse for purposes of a qualified joint-and-survivor annuity or qualified preretirement survivor annuity. See Qualified Domestic Relations Orders and PBGC for more information.

**Survivor Benefit -**The benefit payable to a surviving spouse or designated beneficiary upon the participant's death.

The most common types of survivor benefits are (1) a qualified preretirement survivor annuity that typically is paid to the surviving spouse of a participant who dies ***before*** retiring, and (2) the survivor portion of certain benefit forms, such as a joint-and-survivor annuity, that is paid to the surviving beneficiary of a participant who dies ***after*** retiring. See Payments to Beneficiaries for more information.

## T

**Terminated Vested Participant -**Generally, a former employee who worked long enough to earn vested benefits in a pension plan, but who left the company sponsoring the plan and is not yet receiving a retirement benefit. See also Deferred Vested Participant.

Such participants can receive benefit payments from the plan once they reach the plan's normal retirement age or, if the plan allows, the plan's early retirement age.

**Termination (Multiemployer Plans) -**The withdrawal of all contributing employers of a plan (known as mass withdrawal), or a plan amendment that ends participants' ability to earn additional credit for service with any employer in the plan as of the amendment's effective date.

Unlike terminated single-employer plans, the plan sponsor of a terminated multiemployer plan continues to administer the plan and pay vested benefits out of existing plan assets. PBGC's guarantee of the benefits in a terminated multiemployer plan—payable as financial assistance to the plan—starts if and when the plan is unable to make payments at the level guaranteed under ERISA.

The plan sponsor also is responsible for assessing and collecting withdrawal liability (see Withdrawal Liability).

**Termination (Single-Employer Plans) -**The ending of a single-employer defined benefit plan. The three types of termination are standard and distress terminations, which are initiated by the plan sponsor, and PBGC-initiated terminations.

See How Pension Plans End and the Pension Plan Termination Fact Sheet for more information.

**Termination Premium (for Single-Employer Plans only) -**Generally, an annual premium that single-employer plans must pay to PBGC for three years after certain distress and PBGC-initiated terminations.

The premium is $1,250 per participant per year for three years except for certain airline-related plans, which is $2,500 per participant per year for three years. See Termination Premium Payment Package for more information.

**Trust -**For pension plan purposes, a fund established to hold and invest the assets of a pension plan.

**Trustee -**The person(s) or entity that has the exclusive authority and discretion to manage and control the assets of a pension plan.

**Trusteed Plan -**See PBGC-Trusteed Single-Employer Plan.

## U

**Unclaimed Pension (for Single-Employer Plans only) -**A pension benefit that is owed to a participant in a terminated single-employer defined benefit plan who could not be located by PBGC or the former employer - see Unclaimed retirement benefits and External Resources for Locating Benefits for more information.

**Underfunded Plan -**A defined benefit plan without enough assets to pay all benefits earned by participants. A plan's funded status can vary depending on the method used to value the plan's assets and liabilities. See FAQs: Plan Funding and Fully Funded Plan.

**Unfunded Benefit Liabilities -**The amount by which the value of a defined benefit plan's promised pension benefits exceeds the plan's assets.

**Unfunded Vested Benefits (UVBs) -**The amount by which the value of a defined benefit plan's vested benefits exceeds the plan's assets. UVBs are the underfunding measure on which the variable-rate premium is based.

**Unpredictable Contingent Event Benefit (UCEB) (for Single-Employer Plans only) -**Any pension benefit or benefit increase that is payable on account of a full or partial shutdown of a plant or facility, a permanent layoff, or a similar permanent workforce reduction. The plan may also have other eligibility requirements.

A UCEB based on an event that occurs after July 26, 2005, is subject to a special phase-in limit that phases in the benefit increase from the date of the event.

**USERRA benefit -**An additional accrual of plan benefits for certain participants protected by the Uniformed Services Employment and Reemployment Rights Act. USERRA requires pension plans to grant pension credit (see Credited Service) for time served in the military if a participant leaves his or her job to serve in the uniformed services and, soon after leaving military service, is re-employed by the employer that sponsored the plan.

PBGC guarantees USERRA benefits, up to legal limits, even if the participant is reemployed after the plan termination date or bankruptcy filing date (to learn which date applies, see "Are there any special rules if my plan ends in bankruptcy?" in the General FAQs About PBGC), provided certain legal requirements are met. However, USERRA benefits stop accruing on the plan termination date.

## V

**Variable-Rate Premium (for Single-Employer Plans only) -**The premium that an underfunded single-employer defined benefit plan must pay to PBGC based on the amount of the plan's unfunded vested benefits.

The variable-rate premium is in addition to the flat-rate per-participant premium, which all PBGC-insured plans must pay regardless of funding status. See Premium Rates for more information.

**Vested Benefits -**Generally, pension benefits that a participant has earned a right to receive from a pension plan that are not subject to forfeiture. While vested benefits cannot be forfeited, they may not be fully guaranteed by PBGC.

Under PBGC's premium regulations, specific rules apply for determining whether a benefit is vested for purposes of calculating a single-employer plan's variable-rate premium.

**Voluntary Employee Contributions -**Amounts that participants contribute to a defined benefit plan, as allowed by the plan, that are not mandatory employee contributions.

## W

**Window Benefit -**An additional or improved benefit in a defined benefit plan that is temporarily available to participants who terminate employment during a specified period, generally not exceeding one year.

Employees who leave employment under a "window" plan provision typically receive additional benefits above the amount that they would have normally received based on their age and service at the time they leave. PBGC may insure all, some, or none of a window benefit.

**Withdrawal Liability (for Multiemployer Plans only) -**The liability assessed by a multiemployer defined benefit plan against an employer that (1) permanently stops contributing to the plan, (2) permanently ceases covered operations under the plan, or (3) under certain circumstances, reduces its contributions to the plan.

Plans subject to the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) assess withdrawal liability against an employer for its allocable share of the plan's unfunded vested benefits upon a complete or partial withdrawal of the employer from the multiemployer plan, rather than on plan termination. See Withdrawal Liability for more information.

**Working Retirement -**A situation where a participant wants to start receiving, or continue to receive, pension benefits while working.

In the past, PBGC did not pay early-retirement benefits before normal retirement age (or age 62 if the plan allowed working retirement at that age) to a plan participant who was working for the plan sponsor or a related company. PBGC rescinded its working retirement rule as of June 1, 2021. A participant entitled to a retirement benefit now may receive that benefit even if still working for the plan sponsor or related company.

## Y

**Year of Service -**Typically, a 12-month period of service that a plan credits to an employee for purposes of determining benefit accruals, eligibility, and/or vesting.

The number of hours worked or other units of measures necessary to receive a year of service may vary from plan to plan.****The number of years of service often is used to determine an individual's participation and vesting in a plan, and the amount of his or her accrued benefit (see Credited Service and Accrued Monthly Benefit).

December 11, 2023