The PBGC, Pension Benefit Guaranty Corporation, is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA). The PBGC was created to protect private-sector defined benefit plan participants if a plan’s assets become insufficient to meet the payments payable to participants. To provide this protection, the PBGC charges employers annual premiums for their defined benefit plan.

The PBGC annual premiums consist of two types of premiums – per participant and based on the funded level of the plan. For 2011, each single employer defined benefit plan pays $35 per participant. Also, the employer pays 0.9% of the plan’s underfunding. This is referred to as the variable premium.

This article was last updated on March 18, 2011