Certified Plan Sponsor Professional (CPSP) Practice Exam

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What is the primary purpose of the Pension Benefit Guarantee Corporation?

To provide loans to pension plans
To ensure the payment of pension benefits
To regulate pension plan fees
To mandate employer contributions

The correct answer is: To ensure the payment of pension benefits

The primary purpose of the Pension Benefit Guaranty Corporation (PBGC) is to ensure the payment of pension benefits to participants in private-sector defined benefit pension plans. Established by the Employee Retirement Income Security Act (ERISA) of 1974, the PBGC acts as a safeguard for employees and retirees, stepping in to pay benefits in cases where a defined benefit plan is terminated and lacks sufficient assets to cover promised benefits. This is crucial for providing a safety net for millions of American workers and retirees, as it helps maintain income stability in retirement, even in the event of a pension plan failure. The role of the PBGC does not extend to providing loans to pension plans, regulating pension plan fees, or mandating employer contributions, which are covered by other aspects of pension law and regulation. The focused mission of the PBGC underscores its significance in the landscape of retirement benefits and worker protections.