NU Online News Service, Nov. 13, 2003, 3:43 p.m. EST – The Pension Benefit Guaranty Corp., the government-sponsored enterprise that backs defined benefit pension plans, says it will increase its maximum annual benefit guarantee 0.94% in 2004, to $44,386.22.
The PBGC insures $1.5 trillion in U.S. pension benefits and is responsible for paying benefits to about 1 million members of 3,200 terminated pension plans. The agency computes the annual adjustment to the maximum benefit guarantee using a formula that incorporates changes in Social Security contributions and changes in the benefit base.
The maximum guarantee applies to some workers who retire at age 65 and belong to plans taken over by the PBGC.
The maximum guarantee is lower for plan participants who retire early or who have received recent benefit improvements. Workers who retire at age 55, for example, have a maximum guarantee of only $1,664.49, the PBGC says. But, in some cases, members of plans with adequate resources might receive pension payments that are higher than the maximum guarantee level, the PBGC says.