Q&A: How will a Chrysler widow’s pension be affected by what is going on right now with the auto industry?
Question by V: How will a Chrysler widow’s pension be affected by what is going on right now with the auto industry?
My friend’s grandmother is a spouse of a deceased Chrysler employee (passed away 2 years ago). What will happen to the pension she receives? In what cases will it get cut or eliminated?
Best answer:
Answer by Rick K
That is what I would like to know. I think the pension is insured, but I am not sure. She might be broke soon if they have no money to pay her.
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I dont beleive they can cut or eliminate it. Due to the worker bein gone and with them payin in to their pension Chysler will have to still have that in a seperate account so she should still get it.
I would have to say that is because some of the stocks and bonds are what fund the pensions. If the Stocks and bonds are low then there might be chances of her losing those benefits.
I believe the autoworkers have a defined benefit plan meaning the pension is guaranteed. The money has been deposited in a retirement fund and no longer belongs to the company. It can’t be touched in the event of bankruptcy. Her pension is also covered by the Pension Benefit Guarantee Corporation (PBGC) which is insurance to guarantee pension obligations are met. If there is not enough money in the retirement fund the PBGC makes up the difference. If she has any retiree medical insurance coverage that may be in jeopardy.
If Chrysler files chapter 11, the pension funds are turned over to public pension pool. The pension payment will continue but the amount of payment may be reduced. If her spouse was a high level executive of Chrysler, it will be certain her survival pension will be reduced greatly.
In general, her pension is probably pretty safe.
Both union and salaried plan pensions are covered by a gov’t agency called the Pension Benefit Guarantee Corporation (PBGC). This agency receives premium payments every year intended to build up a fund to guarantee pension plans from bankrupt employers. In many situations, when the company liquidates itself, the PBGC steps in and takes over the plan. You’d hear about this if it happened but would notice no change except that the payer of the monthly check would change.
Note that the protection is limited however. For a non-union worker or a union worker in a plan solely sponsored by Chrysler, a pension of up to about $50,000/year is guaranteed (assuming retirement today). The widow’s benefit is unlikely to be that high unless the deceased was an executive or other high paid employee.
For union sponsored plans, the protection is typically much lower and structured differently. So if the deceased employee was a Teamster there issue is less clear cut.