Background Note | HBS Case Collection | June 2013 (Revised August 2013)

Note on Pension Guarantee Funds

by Robert C. Pozen and Patricia Bissett Higgins


The United States and the United Kingdom both had quasi-government agencies that provided back-up insurance for individuals participating in defined benefit ("DB") pension plans. This note compares and contrasts the United Kingdom's Pension Protection Fund ("PPF") with the United States' Pension Benefit Guaranty Corporation ("PBGC") to illustrate the implications of poorly designed policy structures (the PBGC) in contrast to those created by well-designed policy (the PPF). Specifically, this note analyzes how differences in governance structure, termination capabilities, funding mechanisms and asset management policies created distinctly different financial outcomes and incentive structures.

Keywords: Pensions; Insurance; Pension Guarantee Funds; Pension Protection Fund; Pension Benefit Guaranty Corporation; Employee Retirement Income Security Act; PBGC; ERISA; MAP-21; legislation; Insurance; Saving; Retirement; Labor; Labor and Management Relations; Employees; Insurance Industry; United States; United Kingdom;


Pozen, Robert C., and Patricia Bissett Higgins. "Note on Pension Guarantee Funds." Harvard Business School Background Note 313-139, June 2013. (Revised August 2013.)