What does the PBGC do and which plans pay premiums?
Last updated October 2, 2026
The Pension Benefit Guaranty Corporation insures private-sector defined benefit pensions, guaranteeing basic benefits if a plan fails. Covered single-employer DB plans pay annual per-participant flat-rate premiums plus variable-rate premiums on underfunding; 401(k) and other DC plans are not covered.
The PBGC is the federal backstop for traditional pensions. If a covered defined benefit plan terminates without enough assets, the PBGC steps in and pays guaranteed benefits up to statutory limits.
Sponsor obligations for covered single-employer DB plans:
- Flat-rate premium: an annual per-participant amount, adjusted yearly
- Variable-rate premium: an additional charge per $1,000 of unfunded vested benefits, making underfunding directly expensive
- Reportable events: certain corporate and plan events must be reported to PBGC
Defined contribution plans (401(k), profit sharing) are outside PBGC entirely — participants bear investment outcomes, so there's no promised benefit to insure. For DB sponsors, premium filings and funding strategy belong on the same annual calendar as the actuarial valuation.
Thanks for your feedback!