WASHINGTON — The Pension Benefit Guaranty Corporation announced today that the yearly maximum guaranteed benefit for a 65-year-old retiree has increased to almost $59,320 from about $57,500.
Most retirees who get their pension from PBGC, almost 85 percent according to a 2006 study, receive the full amount of their promised benefit. In some cases, retirees can receive more than the PBGC maximum guarantee. (For more information, read this entry from our blog, Retirement Matters, "Making Sense of the Maximum Insurance Benefit.")
The PBGC maximum guarantee is based on a formula prescribed by federal law. Yearly amounts are higher for people older than age 65, and lower for those who retire earlier or choose survivor benefits (see chart below).
If a pension plan ends in 2014, but a retiree does not begin collecting benefits until a future year, the 2014 rates still apply. For plans that terminate as a result of bankruptcy, the maximum yearly rates are guided by the limits in effect on the day the bankruptcy started, not the day the plan ended.
Beginning in 2014, the maximum yearly guarantee for a 65-year-old retiree is $59,318.16. The increase is not retroactive.
The guarantee increase applies only to single-employer pension plans. The maximum guarantee limit for participants in multiemployer plans is $12,870 with 30 years of service, which has been in place since 2001.
For more information, see PBGC's fact sheet "Pension Guarantees."
The following chart shows the 2014 annual and monthly maximum benefit guarantees for retirees from ages 45 to 75. The maximum amount is lower for retirees who begin getting benefits at ages below 65, reflecting the fact that younger retirees receive more monthly pension checks over a longer lifetime. The maximum amount is higher for benefits starting at ages above 65, because older retirees receive fewer monthly pension checks over their expected lifetimes.
PBGC Maximum Monthly Guarantees for 2014
|Age||Annual Maximum Single Life Annuity||Monthly Maximum Single Life Annuity||Monthly Maximum Joint & 50% Survivor Annuity*|
|* Above joint and 50 percent survivor amounts apply only if both spouses are the same age. Different amounts apply if that is not the case.|
PBGC protects the pension benefits of more than 40 million of America's workers and retirees in nearly 26,000 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans.