How Will Pension Benefits Be Affected if Your Company Goes Bankrupt?

Gerald Fairbanks and Jean Rhian have pensions. That's the good news.

Her pension is with Ford. His pension is with General Motors. That's the bad news.

The auto industry has suffered a great deal during this recession, requiring the federal government to step in. Last month, President Bush agreed to provide $17.4 billion in federal loans to GM and Chrysler. As a condition of the loans, he demanded a corporate restructuring and cuts in union wages and benefits. Ford has said it does not need government aid at this time.

Fairbanks and Rhian, married for 25 years and residents of Easton, have been retired for nearly 10 years. He retired from his job as an engineer at 62. She took a buyout from her job as a systems analyst at 56. Both receive Social Security and each has an Individual Retirement Account.

They own their home and have no credit card debt. But they wonder if they will keep receiving the same pension benefits if either of their companies goes bankrupt.

"I've been wondering if I should go back to work," Fairbanks said.

"I'd say we're worried. Is there anybody who is not worried?" asked Rhian.

It's probably safe to say that the more than 40 million Americans who still have pensions are at least a little bit worried right now.

According to Mercer, a consulting firm, the stock market turmoil of the past year has left corporate pension plans at the largest companies underfunded by $409 billion. At the end of 2007, those plans had a $60 billion surplus.

Auto pensions perhaps are some of the most problematic. U.S. automakers have four retirees for every active worker.

Jeffrey Speicher, a spokesman for the Pension Benefit Guaranty Corp., would not comment on individual pensions because their coverage depends on a variety of factors.

But he did say that Detroit's Big Three automakers face a $41 billion pension shortfall. If the PBGC had to take over the pensions of all three automakers, it would end up paying about $13 billion of that amount because of limits set by Congress.