The Pension Benefit Guaranty Corp. announced that it will increase the yearly maximum benefit a 65-year-old retiree can receive to almost $56,000 from $54,000. The amount PBGC pays its retirees 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.
If a pension plan ends in 2012, but a retiree does not begin collecting benefits until a future year, the 2012 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 2012 the maximum yearly benefit for a 65-year-old retiree is $55,840.92. The increase is not retroactive. 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.
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PBGC protects the pension benefits of 44 million Americans in 27,500 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans.
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