PBGC Raises Guarantee for Single-Employer Pension Plans that Fail
- Learn about the history and purpose of the PBGC.
- Find information on changes happening at the PBGC in 2022 and 2023.
Defined benefit retirement plans, better known as pensions, have been at risk for decades now. In fact, the Pension Benefit Guaranty Corporation (PBGC), a federal agency dedicated to protecting “the retirement incomes of over 33 million American workers in private sector defined benefit pension plans,” was created under the Employee Retirement Income Security Act of 1974.
History of the PBGC
One of the functions of the PBGC is to periodically increase the federal guarantee limit for pension plans that fail. The annual changes coincide with increases in a Social Security index.
The guarantee formula provides for different limits based on a covered person’s age when they begin getting benefits from the PBGC. For example, the limit is lower for people who begin getting benefits at a younger age. This reflects the fact that they’ll receive more monthly pension checks over their expected lifetimes. Conversely, the limit is higher for people who start receiving benefits later in life. In addition, the formula calls for adjustments for retirees who choose a payment form that continues payments to a beneficiary after the retiree’s death.
Changes in 2022 and 2023
In October, the PBGC announced that the guarantee limit for single-employer pension plans insured by the agency and fail in 2023 will be 8.79% higher than the limit that applied for 2022. You can find a table showing the 2023 guarantee limits for various ages and payment forms — meaning, straight-life annuities and joint and 50% survivor annuities — on the PBGC’s website. (The guarantee limit under a separate program for multiemployer plans isn’t indexed and, thus, remains unchanged.)
Earlier in 2022, the PBGC reminded participating employers of modifications to the login process for its My Plan Administration Account (PAA) online portal. These modifications meet new federal cybersecurity requirements for public-facing websites. Most notably, there’s now a requirement to implement two-factor authentication. My PAA users may now log in via Login.gov. The public uses this secure sign-in service to access participating government services. This includes the U.S. Transportation Security Administration’s PreCheck, Social Security, and USAJobs. With this new process, users can use the same email address and password to access all participating government services.
Need further information on the single-employer guarantee limit? Looking for support in managing the financial challenges of a pension plan? Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations to discuss your situation.
Ready to book an appointment now? Click here. Know someone who might need our services? We love referrals!
