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PBGC Blog: Retirement Matters

Maximum Yearly Guarantee. 2012 $56,000. 2013 $57,500. 2014 $59,320.Beginning in 2014, the maximum yearly guarantee for a 65-year-old retiree will be almost $59,320 – a 3.2% increase from the $57,500 rate in 2013.

Most retirees who get their pension from PBGC – almost 85 percent according to a 2006 study  – receive the full amount of their promised benefit. In some cases, retirees can receive more than the PBGC maximum guarantee.

The PBGC maximum guarantee 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 2014, but a retiree does not begin collecting benefits until a future year, the 2014 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.

The increase is not retroactive and applies only to single-employer pension plans. The maximum guarantee limit for participants in multiemployer plans is $12,870 with 30 years of service, which has been in place since 2001.

For more information, see PBGC's Maximum Monthly Guarantee Tables or a previous blog post "Making Sense of the Maximum Insurance Benefit."

Pennfield Corporation logoPBGC will pay retirement benefits for nearly 580 current and future retirees of Pennfield Corp., an animal feed mill based in Lancaster, Pa.

The agency stepped in because Pennfield sold the majority of its assets in bankruptcy proceedings to agribusiness giant Cargill, Inc. Cargill did not assume responsibility for the pension plan.

PBGC will pay all pension benefits earned by Pennfield retirees up to the legal limit of about $56,000 for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

According to PBGC estimates, Pennfield's plan was 54 percent funded with $15 million in assets to pay $28 million in benefits. The agency expects to cover the entire $13 million shortfall.

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Message to HCTC Participants

  |   October 2, 2013

As we've previously mentioned on Retirement Matters, PBGC is not affected by the federal government shutdown. If you count on us for your pension benefit, you will be paid on time.

However, if you get your health care coverage through the Internal Revenue Service's (IRS) Health Care Tax Credit (HCTC) Program, you may be affected by the shutdown.  If you participate in the HCTC Program, please read the following message from the IRS HCTC Stakeholder Engagement Team:

10/1/13 - The IRS HCTC Program is operating with a significantly reduced staff and capacity during the current government shutdown. The HCTC Program will mail invoices and make payments to health plans for current Monthly Participants.  Please be sure your payment is received by the due date listed on your HCTC invoice. If you do not receive an invoice, please refer to a previous monthly invoice for your HCTC account number and consider making an online payment. You can also obtain a blank payment coupon on this website.

The HCTC Customer Contact Center will be closed.  If you have a health coverage or payment-related emergency you can call and leave a message at 1-855-379-0440; however please note that not all callers leaving a message at this number will receive service. This mailbox is being used to provide limited service to current monthly HCTC Participants only, who are facing an emergency health coverage or insurance payment issue.  We apologize, in advance, for our inability to provide greater service at this time. Thank you for your understanding.

When the federal government reopens, the HCTC Program will resume regular processing of all Registration Forms, Family Member Registration Forms, and Reimbursement Request Forms received by the October 1st cutoff for processing in advance of the 1/1/14 expiration of the Health Coverage Tax Credit.

Please note that PBGC does not have further information about HCTC coverage. If you have a question, please call the HCTC Customer Contact Center and leave a message at 1-855-379-0440.

Photo: PBGC Director, Joshua GotbaumShould the government shutdown, PBGC will stay open for business. All of us at PBGC—federal employees and contractors—will remain on the job. We will continue to pay benefits to the retirees who depend on us, to do our other work, and to honor our obligations.

This is not new. PBGC stayed open throughout the government shutdowns in 1995-96. That's because PBGC is different from most government agencies: Our funds are paid for by insurance premiums and plan assets, not taxpayer dollars.

As always, PBGC regards it as especially important to continue to do our work well, diligently, and with the dedication America's workers and retirees deserve.

Kodak logo

Last week, there was a Kodak moment that all of the company's employees and retirees could be proud of.

On Tuesday, Eastman Kodak Co., known for its iconic film business, ended a 20 month bankruptcy proceeding with its two pension plans intact. That means the nearly 63,000 people covered by those plans will have a more secure retirement.

When companies seek bankruptcy protection it doesn't automatically mean that plans will be shut down and come to us. During Kodak's bankruptcy, we were on the unsecured creditors committee and we worked with them to ensure the plans would continue.

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Allied Systems Holdings Inc. logoPBGC will pay retirement benefits for more than 650 current and future retirees of Allied Systems Holdings Inc., a vehicle transportation business based in Atlanta, Ga.

The agency stepped in because Allied Systems is selling the majority of its assets in bankruptcy proceedings and potential buyers haven't agreed to continue the company's three single-employer pension plans.

PBGC will pay all pension benefits earned by Allied Systems retirees up to the legal limit of about $57,500 for a 65-year-old.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

According to PBGC estimates, Allied Systems plans are collectively 58 percent funded with $45 million in assets to pay $78 million in benefits. The agency expects to cover the entire $33 million shortfall.

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