The Pension Benefit Guaranty Corporation (PBGC) announced on Oct. 28 that the guarantee limit for single-employer plans that fail in 2017 will be higher than the limit that applied for 2015 and 2016.
The maximum annual guarantee limits for 2017 include the following.
Age 70
Annual Maximum Single Life Annuity: $106,957
Annual Maximum Joint and 50% Survivor Annuity: $96,261
Age 65
Annual Maximum Single Life Annuity: $64,432
Annual Maximum Joint and 50% Survivor Annuity: $57,989
Age 60
Annual Maximum Single Life Annuity: $41,881
Annual Maximum Joint and 50% Survivor Annuity: $37,693
Age 55
Annual Maximum Single Life Annuity: $28,994
Annual Maximum Joint and 50% Survivor Annuity: $26,095
A table that shows the limits for every age between 45 and 75 is available here.
These limits generally apply for participants whose plan terminates in 2017. However, if a plan terminates in 2017 as a result of a bankruptcy that began in an earlier year, the limits in effect for that earlier year apply. The increases for 2017 are not retroactive; payments to retirees whose plans terminated before 2017 will not change.
The guarantee in the separate program for multiemployer plans has not changed.
Single-Employer Plan Guarantee Limit
The guarantee limit is a cap on what the PBGC guarantees, not on what it pays. In some cases, PBGC pays benefits above the guarantee limit. Whether that happens depends on the retiree’s age and how much money was in the plan when it terminated. In most cases, the single-employer PBGC guarantee is larger than the pension participants in such plans earned.
Multiemployer Plan Guarantee Limit
The PBGC maximum guarantee for participants in multiemployer plans is also based on a formula prescribed by federal law. Unlike the single-employer formula, the multiemployer guarantee is not indexed (i.e., it remains the same from year to year) and does not vary based on the retiree's age or payment form. Also unlike the single-employer formula, it varies based on the retiree's length of service. In addition, the multiemployer guarantee structure has two tiers, providing 100% coverage up to a certain level and 75% coverage up to a second level. For example: for a participant who retires with:
The multiemployer guarantee limit has been in place since 2001.
The maximum annual guarantee limits for 2017 include the following.
Age 70
Annual Maximum Single Life Annuity: $106,957
Annual Maximum Joint and 50% Survivor Annuity: $96,261
Age 65
Annual Maximum Single Life Annuity: $64,432
Annual Maximum Joint and 50% Survivor Annuity: $57,989
Age 60
Annual Maximum Single Life Annuity: $41,881
Annual Maximum Joint and 50% Survivor Annuity: $37,693
Age 55
Annual Maximum Single Life Annuity: $28,994
Annual Maximum Joint and 50% Survivor Annuity: $26,095
A table that shows the limits for every age between 45 and 75 is available here.
These limits generally apply for participants whose plan terminates in 2017. However, if a plan terminates in 2017 as a result of a bankruptcy that began in an earlier year, the limits in effect for that earlier year apply. The increases for 2017 are not retroactive; payments to retirees whose plans terminated before 2017 will not change.
The guarantee in the separate program for multiemployer plans has not changed.
Single-Employer Plan Guarantee Limit
The guarantee limit is a cap on what the PBGC guarantees, not on what it pays. In some cases, PBGC pays benefits above the guarantee limit. Whether that happens depends on the retiree’s age and how much money was in the plan when it terminated. In most cases, the single-employer PBGC guarantee is larger than the pension participants in such plans earned.
Multiemployer Plan Guarantee Limit
The PBGC maximum guarantee for participants in multiemployer plans is also based on a formula prescribed by federal law. Unlike the single-employer formula, the multiemployer guarantee is not indexed (i.e., it remains the same from year to year) and does not vary based on the retiree's age or payment form. Also unlike the single-employer formula, it varies based on the retiree's length of service. In addition, the multiemployer guarantee structure has two tiers, providing 100% coverage up to a certain level and 75% coverage up to a second level. For example: for a participant who retires with:
- 20 years of service, the current annual limit is 100% of the first $2,640 and 75% of the next $7,920 for a total guarantee of $8,580 per year.
- 35 years of service, the annual limit is 100% of the first $4,620 and 75% of the next $13,860 for a total guarantee of $15,015 per year.
The multiemployer guarantee limit has been in place since 2001.
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