Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened?
On Feb. 28, 1975, the Pension Benefit Guaranty Corp. paid out its first check.What Else Was Going On In the World?
In 1975, the Vietnam War officially ended when communist forces took control of Saigon. In the United States, the movie “Jaws” was a blockbuster hit. The U.S. inflation rate was 9.2percent.Government-Backed Pensions
Company-sponsored pension plans are only as secure as the companies running them—or at least that’s how it was prior to 1975. The Employee Retirement Income Security Act of 1974 established the PBGC, a U.S. government entity that guarantees private pension payments when companies can’t afford to make their payments. The PBGC was created after several major U.S. companies, including Studebaker, failed to meet their pension payment obligations when they became insolvent.The PBGC is funded via insurance premiums that are paid by the companies whose plans it protects, as well as investments and assets it takes over from companies formerly responsible for plans. The PBGC is not funded by U.S. taxpayers.
In February 1975, the PBGC officially cut its first pension check, a $140.75 payment to a participant in the International City Bank of New Orleans Employees Retirement Plan.
In 2016, the PBGC paid out benefits to nearly 840,000 retirees. As of 2017, the PBGC paid out a monthly maximum of $5,369.32 to retirees.
By Wayne Duggan
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