Opinion ID: 1023273
Heading Depth: 4
Heading Rank: 1

Heading: The PBGC as Guarantor.

Text: The PBGC is a wholly-owned corporation of the United States Government that is modeled after the Federal Deposit Insurance Corporation. Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 636-37, 110 S.Ct. 2668, 110 L.Ed.2d 579 (1990). The PBGC's Board of Directors consists of the Secretaries of the Treasury, Labor, and Commerce. 29 U.S.C.A. § 1302(d) (West 1999 & Supp.2007). The corporation administers Title IV of ERISA, which includes a mandatory government insurance program that protects the pension benefits of private-sector American workers who participate in ERISA-covered pension plans. LTV Corp., 496 U.S. at 637, 110 S.Ct. 2668; 29 U.S.C.A. §§ 1321-1322a (West 1999 & Supp.2007). The cost of the PBGC insurance is borne primarily by employers that maintain ongoing pension plans. LTV Corp., 496 U.S. at 638, 110 S.Ct. 2668. ERISA requires covered employers to pay annual premiums into the program. See 29 U.S.C.A. §§ 1306, 1307 (West 1999 & Supp.2007). The program is also financed by statutory liability imposed on employers who terminate under-funded pension plans. LTV Corp., 496 U.S. at 638, 110 S.Ct. 2668. In enacting Title IV, Congress sought to ensure that employees and their beneficiaries would not be completely deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plan. Id. at 637, 110 S.Ct. 2668 (internal quotation marks omitted). ERISA authorizes the PBGC to institute termination proceedings against an ERISA-covered plan whenever, inter alia, the plan has insufficient assets to satisfy its pension benefit obligations or the possible long-run loss of the PBGC with respect to the plan will increase unreasonably if the plan is not terminated. 29 U.S.C.A. § 1342(a). Once a plan is terminated, the PBGC is authorized to appoint a statutory trustee to administer the plan. 29 U.S.C.A. § 1342(b)(1)-(3). The trustee must use the plan's assets to cover what it can of the plan's benefit obligations. 29 U.S.C.A. § 1344 (West 1999 & Supp.2007). If there is a shortfall, then [t]he PBGC then must add its own funds to ensure payment of most of the remaining `nonforfeitable' benefits, i.e., those benefits to which participants have earned entitlement under the plan terms as of the date of termination. LTV Corp., 496 U.S. at 637-38, 110 S.Ct. 2668. ERISA does place limits on the benefits the PBGC may guarantee upon plan termination, however, even if the participant was entitled to greater benefits under the terms of the plan. Id. at 638, 110 S.Ct. 2668.