PBGC Coverage Ends Upon Pension Risk Transfer

The Pension Benefit Guaranty Corporation (PBGC) administers federal insurance for defined benefit plans. This coverage ends when a pension risk transfer occurs. During a pension risk transfer, a former employer pays an insurance company a lump sum to assume the pension obligation, removing it from the company’s books.

This pension risk transfer is a common corporate finance move used when companies wish to offload pension liabilities. Once the lump sum is paid, the insurer assumes responsibility for the payments, which can affect recipients of the pension.

PBGC administers federal insurance for defined benefit plans, while trustees navigate IRS and DOL regulations, with DOL expanding the Abandoned Plan Program.