Park Production offered employees a defined-benefit retirement plan, in which retirees received benefits calculated on the basis of their age, earnings, and years of service. But the company didn't keep up with technology, and its earnings fell. When the stock market dipped, the company could no longer afford to keep paying for its retirement benefits. What protection will the retirees have in this situation?

A) Park Production must give the employees the option to sell their stock in the company.
B) The employees will receive payouts from their 401(k) plans.
C) The employees will receive a share of profits as part of the company's ESOP.
D) Because the plan was underfunded, the retirees will no longer receive benefits.
E) The Pension Benefit Guarantee Corporation will provide them with a basic benefit.

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Victoria Morales · Accepted Answer

Final Answer : E, Explanation :  The Pension Benefit Guarantee Corporation (PBGC) is a government agency that insures defined-benefit pension plans in case of employer bankruptcy or failure to meet benefit obligations. Even if a company cannot afford to pay for its retirement benefits, the PBGC will step in to provide retirees with a basic benefit. However, the amount of the benefit may not be as much as the original plan promised, and certain restrictions may apply.

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