With the current state of our economy, many employers will ponder the idea of reducing employee benefits in order to increase profits. And despite popular belief, many companies do still have defined benefit (pension) retirement plans. So if your employer decides to eliminate the pension plan--or worse goes out of business--then then what happens to your pension?

First of all, let's be clear: Your pension will be secure.

The plan will purchase an annuity for you that will pay your benefits when due (some plans may also let you elect a lump-sum payment). But you'll only receive the benefit you've earned as of the plan's termination date, which could be far less than the full pension benefit you had counted on.

If, however, the plan is underfunded (that is, there aren't enough assets to pay all benefits earned to date), then the fate of your pension depends in part on whether or not your plan is insured by the Pension Benefit Guaranty Corporation (PBGC). Fortunately, most defined benefit plans are covered, but check with your plan's administrator to be sure. When an underfunded plan terminates, the PBGC takes over responsibility for making pension payments.

The PBGC guarantee applies only to "basic benefits"--normal and early retirement benefits, survivor annuities, and disability benefits--earned (and vested) before the plan terminates. If the plan terminates while your employer is in bankruptcy, the guarantee may be limited to benefits earned before the bankruptcy filing.

According to the PBGC, 84% of retirees in recent years received the same benefit from the agency that they would have received from their pension plan.

Be sure to seek help from a qualified financial professional if you have additional questions or concerns.