Pension Benefit Guaranty Corporation - Maximum Guaranteed Benefit

Maximum Guaranteed Benefit

The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2011, workers who retire at age 65 can receive up to $4,653.41 per month (or $55,840.92 per year) under PBGC's insurance program for single-employer plans.

Benefit payments starting at ages other than 65 are adjusted actuarially, which means the maximum guaranteed benefit is lower for those who retire early or when there is a benefit for a survivor, and higher for those who retire after age 65. Additionally, the PBGC will not fully guarantee benefit improvements that were adopted within the five-year period prior to a plan's termination or benefits that are not payable over a retiree's lifetime.

Other limitations also apply to supplemental benefits in excess of normal retirement benefits, benefit increases within the last five years before a plan's termination, and benefits earned after a plan sponsor's bankruptcy.

For the multiemployer plans, the amount guaranteed is based on years of service. For plans that terminate after December 21, 2000, the PBGC insures 100 percent of the first $11 monthly payment per year of service and 75 percent of the next $33 monthly payment per year of service. For example, if a participant works 20 years in a plan that promises $19 per month per year of service, the PBGC guarantee would be $340 per month.

Multiemployer plans that terminated after 1980 but before December 21, 2000, had a maximum guarantee limit of 100 percent of the first $5 of the monthly benefit accrual rate and 75 percent of the next $15.