Annuity Purchase and the 1998 PBGC Guarantee for Under-Funded Benefit Plans Announcement
The PBGC has announced that the maximum benefit it will guarantee for retirees in under-funded single-employer defined benefit plans that terminate in 1998 will be $2,880.68 per month, or $34,568.16 per year. (PBGC New Release 98-06, 11/12/97)
The maximum monthly guaranteed amounts for plans terminating in 1997 is $2,761.36 per month, or $33,136.32 per year.
Under ERISA, the maximum guaranteed amount must be adjusted annually based on changes in the Social Security contribution and benefit base.
The maximum guarantee applies to workers who retire at age 65 or later. Maximum guarantees are reduced for retirees taking earlier retirement or electing survivors' benefits.
In some instances, where a pension plan has adequate resources or PBGC recovers sufficient amounts, a participant may receive benefits in excess of the maximum guarantee.
The 1998 maximum guarantee will be published in the December 15, 1997, Federal Register.
About 441,000 workers and retirees in 2,348 pension plans rely on the PBGC for their retirement income.
Reprinted from Pensions & Benefits Week, November 17, 1997, Research Institute of America, Subscriptions: 800-431-9025, $275/year.
Further Reading For Retirement Benefit Issues:
- Failure to Inform That Benefit Choice Was Irrevocable
- PBGC Finds Pension Under-payments in Audits of Standard Terminations
- Senate Committee Hearing On Benefit Miscalculations
- Will My Money Last for the Rest of My Life?
- Court Okays Increasing Plan's "Normal Retirement Age" From Age 65 to 67
- PBGC Announces Maximum Guarantee for Underfunded Plans Terminating in 1998
- Survey Finds Baby Boomers, Especially Women, Headed for Financial Disaster in Golden Years
- Retroactive Amendment Reducing Required Contributions Permitted for Highly Compensated Employees Only
- Retirement Planning: Making It Last Forever
