PBGC sets maximum benefit for plans taken over next year

WASHINGTON — The federal agency that insures private pension plans for millions of Americans announced Tuesday that the maximum annual benefit for plans taken over next year will be $49,500 for workers who wait until 65 to retire.

The figure represents a 3.9 percent increase from $47,659, which is this year’s maximum annual benefit for those who wait until 65 to retire.

Workers who retire before they are 65 get smaller benefits, while those who work longer get larger benefits, said the Pension Benefit Guaranty Corp.

The benefit figure is arrived at each year based on a formula set in law that takes into account such factors as growth in the benefit base.

The maximum annual pension of $49,500 next year for someone retiring at 65 translates into a maximum monthly payment of $4,125, the agency said.

It was created in 1974 as a government insurance program for traditional, defined benefit pension plans. Those plans give retirees a fixed monthly amount based on salary and years of employment. Companies that sponsor these traditional pension plans pay insurance premiums to the agency. If a company cannot support its pension obligations, the agency takes over the plan.