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The ceiling income from pension plans terminating in 2008 will be 4.5% more than those winding up this year.
Stephen Taub, CFO.com | US
October 30, 2007
The Pension Benefit Guaranty Corporation has raised the maximum insurance benefit for participants in underfunded pension plans terminating in 2008 by about 4.5 percent. The new cap will be $51,750 per year for those who retire at age 65, up from $49,500 for plans ending in 2007.
The amount is lower for those who retire earlier. For example, the maximum for an individual who retires at 75 is $157,320, and $12,938 for those who pack it in at 45. Lower benefits also apply for those who elect survivor benefits.
If a pension plan terminates in 2008 but a participant does not begin collecting benefits until a future year, the 2008 maximum insurance limits still apply. The PBGC cannot guarantee benefits that exceed the amount payable at the plan’s normal retirement age.
The PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 to protect American workers and retirees enrolled in private single-employer and multiemployer defined benefit pension plans.
It does not receive funds from general tax revenues. Rather, its operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
The PBGC said an overwhelming majority of participants in plans taken over by the agency face no reduction in benefits due to the legal limits on coverage.