When PBGC becomes trustee of a pension plan, we make sure that retirees continue to get their checks without interruption. Participants who wish to retire after PBGC has trusteed a plan generally should begin receiving their pension payments within 90 days of submitting an application to PBGC.

For more general information on how PBGC's guarantees work and related topics, visit PBGC's Workers and Retirees Web page and explore "Benefits Information" in the center of the page. Our general Frequently Asked Questions provide general information in an easy-to-use Q&A format.

The questions that follow may be of particular interest to Chrysler employees and retirees. Please note that plan termination is a separate event from bankruptcy. The fact that Chrysler has filed for bankruptcy does not mean that any pension plan that Chrysler sponsors has been or will be terminated. (But see Q.7 for important implications of the bankruptcy petition date.)

INSURED AND UNINSURED PLANS

Q1. Does PBGC insure my pension plan?

A1. Refer to the list of Chrysler plans PBGC insures at the bottom of this page to determine whether your plan is insured. Generally we insure qualified defined benefit pension plans. We do not insure defined contribution plans such as 401(K) plans.

HEALTH BENEFITS

Q2. Does PBGC guarantee health benefits for retirees, such as those provided under the Voluntary Employees' Benefits Association?

A2. No, PBGC guarantees only pension benefits under a qualified defined benefit pension plan.

TEMPORARY ("BRIDGE") PAYMENTS

Q3.  My pension plan features a temporary supplement to "bridge" the difference between social security retirement age and my actual retirement age. Does PBGC guarantee temporary supplements?

A3.  PBGC cannot guarantee more than your plan would have provided had you retired at your normal retirement age with a straight life annuity. For example, let's say your monthly benefit would have been $1,000 at normal retirement age, but you retired early with $900 per month as your early retirement benefit plus $600 per month as a temporary supplement payable until age 62. Your total benefit, $1,500 per month, is larger than the $1,000 benefit you would have received if you had retired at your normal retirement age.  PBGC can pay you only $1000 per month ($900 per month early retirement benefit plus $100 supplement) until age 62 (and $900 per month after age 62). Other limitations may reduce your benefit, or the allocation of the assets of the plan may increase it.

SHUTDOWN BENEFITS

Q4. I became eligible for additional benefits when the facility where I worked was shut down. Are the additional benefits guaranteed?

A4. If an event such as a shutdown or lay-off occurred after July 26, 2005, and less than five years before your plan's termination date (or the date that the plan sponsor's bankruptcy proceeding began), the additional benefits may not be fully guaranteed. The phase-in rule described in the FAQs would treat the additional benefits as if they were first adopted by the plan on the shutdown date.

EARLY RETIREMENT INCENTIVES

Q5. I retired under a recent early retirement incentive program that allowed employees ages 51 to 62 with 10 or more years of service to retire with full retirement benefits. Will PBGC guarantee my early retirement benefit?

A5. If you are receiving higher benefits because of this early retirement incentive, the additional benefits may not be fully guaranteed. The phase-in rule described in FAQs would apply to the additional benefits if they were first adopted by the plan or became payable to eligible employees less than five years before the plan's termination date (or less than five years before the bankruptcy petition date.)

HOW PBGC ALLOCATES ASSETS

Q6. If my plan is well funded, will I receive a larger pension than what PBGC guarantees?

A6. If your plan ends (terminates) with enough money to pay all the pension benefits promised by the plan, you will receive your entire plan benefit.

If the plan's assets do not completely fund the plan benefits, PBGC follows specific rules to allocate the pension plan's assets to six priority categories (PC1 thru PC6).

For example, if you made voluntary or mandatory contributions, the benefits resulting from those contributions are in priority category 1 (PC1) and/or priority category 2 (PC2), respectively. If you were retired or eligible to retire three years before the date your plan ended or filed for bankruptcy, some or all of your benefit is in priority category 3 (PC-3). PBGC's priority categories are described on the Priority Categories Web page.

For most participants in PBGC-trusteed plans the guaranteed benefit is the same as the plan benefit.  But if your benefits are reduced by PBGC's guarantee limitations, the asset allocation may provide a higher benefit than the guaranteed benefit.

BANKRUPTCY

Q7. What happens to my benefits if my plan ends after the plan's sponsor files for bankruptcy protection?

A7. If your plan sponsor (usually your employer) files a petition for bankruptcy protection before your plan ends, and is still in bankruptcy when the plan ends, PBGC uses the bankruptcy petition date instead of the termination date for your plan to determine the guaranteed pension benefit amount.

This can affect the pension benefits PBGC pays you in several ways.

As an example, assume an employee of Company X has 20 years of service as of July 1, 2009, when Company X files for bankruptcy. July 1, 2009, is the bankruptcy petition date. Let's also say the plan ends July 1, 2011, at which point the employee has completed 22 years of service.

In this example, PBGC would not guarantee any benefits the employee earned after July 1, 2009. These pension benefits earned after the bankruptcy petition date are "non-guaranteed benefits" that generally are payable to plan participants only if their plan has sufficient plan assets for them. Thus, in this example, PBGC will guarantee a pension benefit based only on the employee's first 20 years of service (and not the full 22 years). This limitation also applies to your salary or any other factor that changes between the bankruptcy petition date and the date your plan ends, if your plan uses them to determine your benefit.

The bankruptcy petition date—not the date your plan ends—also becomes the basis for applying the legal limitations on your guaranteed pension benefit. In the above example, the maximum insurance limitation would be based on the 2009 levels not the 2011 levels, because the plan's sponsor filed for bankruptcy in 2009. Also, the phase-in limitation mentioned in Q.4  would be calculated using the bankruptcy petition date, not the date the plan ends.

Lastly, the bankruptcy petition date—not the date your plan ends—is the date PBGC uses to determine who is eligible for a benefit in PC3 and the amount of the PC3 benefit. This means that your PC3 benefit will be the plan benefit payable three years before bankruptcy petition date, based generally on the plan provisions in effect five years before the bankruptcy petition date

Chrysler Plans that PBGC Insures