PBGC Raises Benefit Amount Payable as a Lump Sum
FOR IMMEDIATE RELEASE
July 15, 1998
The Pension Benefit Guaranty Corporation (PBGC) today announced an increase from $3,500 to $5,000 in the maximum value of a benefit it will pay in the form of a single, lump-sum payment to participants in pension plans that have been taken over by the agency.
"We will continue to urge people who receive lump-sum payments from PBGC to save for their future by transferring the payments directly into another retirement plan such as an IRA," said PBGC Executive Director David M. Strauss. "The change gives those who are entitled to receive a very small pension from PBGC the ability to combine their benefit with other retirement savings."
PBGC will make the one-time payment if the value of the benefit does not exceed $5,000. However, a participant has the option of choosing not to take the lump-sum and receive the benefit in the form of an annuity if the monthly benefit at the participant's normal retirement age would be at least $25. The change, which is effective with its publication in the July 16, 1998, Federal Register, is consistent with a similar change in the Taxpayer Relief Act of 1997 for private pension plans.
No comments were received on the proposed change, which was published last April.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by some 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
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PBGC No. 98-31