PBGC 2003 Maximum Benefit Up by 2.3%

November 8, 2002 (PLANSPONSOR.com) - Retirees in private-sector defined benefit pension plans terminating in 2003 will get a $3,664.77 monthly maximum - a 2.38% hike from plans terminating this year, the federal pension insurer has announced.

The Pension Benefit Guaranty Corporation (PBGC) said the maximum payouts were adjusted according to ERISA’s requirement that the guarantees be measured annually against any changes in the Social Security contribution and benefit base.

The adjusted yearly maximum is $43,977.24, the PBGC said.

According to the PBGC, the maximum guarantee applies to workers who retire at age 65 and can be reduced for those who retire at younger ages or who elect survivor benefits.

A plan participant can get more than the guarantee in instances where a pension plan has adequate resources or the PBGC recovers sufficient assets, the PBGC said.

About 624,000 workers and retirees in nearly 3,000 pension plans rely on PBGC for their retirement income, the agency said.

PBGC is a federal corporation created under ERISA, which currently guarantees payment of basic pension benefits earned by about 44 million American workers and retirees participating in over 35,000 private-sector defined benefit pension plans.  

The agency is funded by insurance premiums paid by covered companies and the PBGC’s investment returns.