The Pension Benefit Guarantee Corporation (PBGC) is to pensions as the FDIC is to banks. Just like the FDIC insures your savings accounts and CDs, the PBGC protects your retirement savings if a pension fails. With more employers freezing pensions or folding altogether, it’s somewhat reassuring to know that the PBGC is there. But consider this:

This year marks the seventh straight year that the PBGC has been on the Government Accountability Office’s “high-risk” watch list. After bailing out thousands of pension plans since its creation in 1974, the PBGC racked up a deficit of $11.2 billion as of September 2008. Experts later warned that if the PBGC were forced to take over the pension plans of massive companies, such as General Motors, its deficit could double. That’s precisely what happened earlier this year when PBGC took over the pension plan of Delphi, an auto parts maker formerly owned by GM (which has sparked a separate, still raging controversy). As of October 2009, the PBGC’s deficit stands at $33.5 billion.

If the PBGC’s liabilities continue to outstrip its assets, it’ll likely be the next candidate for a big government bailout – at the taxpayer’s expense. What this would mean for the retirement accounts of individuals is unclear. The PBGC covers only “defined benefit” plans which does not include 401(k) and newer retirement plans but, of course, these plans are still subject to market woes.

Your best bet: save, diversify and plan for the worst even as you hope for the best.

With stocks and jobs on shaky ground, liquidity is the new black. Reliability now trumps outperformance as consumers seek safer havens to stash their cash. As the NY Times Bucks blog points out, online high yield savings accounts offer plenty of predictability as well as a tiny bit of return. You won’t find the jaw-dropping 3.5% APY that was par for the course a few years ago, but the rates of online banks are nearly all well above the national average.

However, opportunistic marketers are hip to the trend of savers scouring the web for high savings rates and often employ bait-and-switch tactics to get you in the door. Plus, some one-stop shops that claim to offer you competitive comparisons are really only feeding you the rates from their advertisers.

Furthermore, with so many banks making offers, it’s important to ensure that your CDs and savings accounts are guaranteed by the FDIC. For example, the so-called “certificates of deposit” offered by Stanford Financial Group turned out to be just another Ponzi scheme.

By all means, use the Internet when looking for high interest rate savings accounts and CDs. But keep the following in mind:
Be wary of exotic sounding instruments with unbelievable returns.
Always check the FDIC website to see if a bank is insured Watch for conflicts of interest when working with aggregators – are they buyer-centric or seller-centric?

The best practices for shopping for high yield savings accounts online are no different than any transaction on the Internet. The deals are out there – just be extra diligent when investigating the offers.

Accuse us of Christmas creep if you want – but it’s never too early to start saving. Making ends meet during the holidays without being a scrooge is a challenge, especially with the economy in a slump. But instead of dipping into your retirement savings or declaring a war on Christmas, try some of these ideas:

Begin Saving Now

If you can commit to saving $50 a week starting now, you’ll have $400 of gift money in your pocket by the time those reindeer paws hit the rooftop. Cut back on discretionary spending such as fast food, lattes and movies and sock that money away in a separate online savings account (you can open in minutes).

Give the gift of savings

It may not be fun to unwrap, but a savings account, retirement savings account or mutual fund account makes a great gift for kids. It may be only a couple dollars now, but it’ll be worth thousands by the time they hit college or retirement.

Setup a Christmas Savings Account

Many banks and credit unions offer special savings accounts that automatically transfer a set increment each month so you’ll have enough for the holidays. As an added incentive, some banks even charge a penalty if you withdraw the money before November 1st (“Do not open till Christmas!”).

As with all foreseeable expenses, planning is the best way to minimize the financial pain. Whether you do so consciously or automatically is immaterial – what matters is that you start sooner rather than later.