#3 Financial Risks—Business Risks
You should take into consideration that loss of pension plan funds can unfortunately happen if the employer that sponsors the pension plan you’ve opted for goes bankrupt or the insurer that is providing annuities becomes insolvent.
There are guarantees for private pension plans under the Pension Benefit Guarantee Corporation (PBGC) that could actually protect some of your pension income, but maybe not all of it.
Defined-contribution plan accounts are not guaranteed, and plan participants bear losses directly. However, unlike pension plans, the balances in these accounts generally do not depend on the financial security of the employer, except for the employer’s ability to make matching contributions and in cases where plan balances include company stock.
