The PBGC itself provides information on defined-benefit plans it has taken over and now oversees. At the PBGC website, you can:
• Check on the existence or health of a private pension plan.
• Review reports about the financial health of a private pension plan – and if it is underfunded, what its managers are doing to restore it to health.
• Get an estimate as to what your income might be from a plan.
• Find out what your options are if a plan you are vested in is managed by the PBGC.
• Find out how to appeal a decision about your eligibility for a pension.
What if you have worked for a local, state or federal government for part or all of your career? The process of tracking the future of your pension is different. "In the private sector, you get a letter from a government agency if the fund has much lower assets than liabilities – in other words, is thought to be in trouble – but in the public sector, there isn't that law requiring that information, which, frankly, may not be that helpful," says Teresa Ghilarducci, chair of the economics department and director of the Schwartz Center For Economic Policy Analysis at the New School for Social Research.
You must piece together information from reports generated by watchdog groups and the governments themselves.
The Pew Charitable Trusts support an ongoing project that analyzes the fiscal status of municipal and state pension plans. Its latest research, released Jan. 15, found that 61 U.S. cities have a cumulative shortfall of $217 billion between what retirees are promised and what the cities can actually pay. If your state is having significant pension tensions, track the situation through the State Budget Crisis Task Force, which reports on long-term fiscal responsibility in six states (California, Illinois, New Jersey, New York, Texas and Virginia) experiencing significant challenges. It outlines tactics that all states can adopt to ensure they can meet their public pension obligations. Getting familiar with pension concepts, such as "reserve funds," can help you follow public debate about how pensions are managed in your state.
The key number to track, Ghilarducci says, is the "funded status," also called the "funded pension ratio," which is the pension fund's liabilities over its assets. "You're looking for it to be a 1-to-1 ratio," she says. That means the fund already has the amount it owes (typically for the next 25 years).
Good and bad investment cycles can push that ratio up or down, she notes. "If it's less than 1 to 1, the question is how much below, for how long and what is the plan doing about it?" Ghilarducci says. Good years offset bad years, so "Nobody gets excited unless it drops below 75 percent for a number of years."
"Most people will be reassured when they look at this," Ghilarducci says. "Most of the funds are in pretty good shape. It's more important on a personal finance basis to make sure that you are contributing the maximum to your retirement funds overall."