Certified Plan Sponsor Professional (CPSP) Practice Exam

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What does the acronym PBGC stand for?

  1. Pension Benefit Guarantee Council

  2. Pension Benefit Governance Corporation

  3. Pension Benefit Guarantee Corporation

  4. Pension Board Guarantee Corporation

The correct answer is: Pension Benefit Guarantee Corporation

The acronym PBGC stands for Pension Benefit Guarantee Corporation. This organization was created to protect the retirement incomes of American workers by insuring defined benefit pension plans. If a defined benefit plan fails due to insufficient funds, the PBGC pays benefits to the participants up to a certain limit. This safeguard helps maintain the stability of pension plans and provides a safety net for retirees who may have otherwise lost their promised benefits. The other answers do not correctly represent the name or function of the organization. The words "Guarantee Council," "Governance Corporation," and "Board Guarantee Corporation" do not accurately reflect the established title or the mission of the PBGC. Understanding the correct name is crucial for recognizing the role the PBGC plays in retirement security and pension benefits.

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