The maximum pension payment insured by the federal government will be $54,000 in 2010, unchanged from 2009, the agency that insures private sector pensions recently announced. Insurance amounts will not increase next year because they are indexed to Social Security benefits, which will also remain the same in 2010, according to the Pension Benefit Guaranty Corporation.
The maximum insured pension is higher for workers who delay retirement and lower for those who retire early. So, a worker who retires at age 45 in 2010 will have their pension insured up to $13,500 annually, while an employee who works until age 75 could have a $164,160 pension fully insured. Annual maximums are also reduced for workers who elect survivor’s benefits for a spouse. For example, a worker who retires at age 65 and sets up survivor’s benefits for a spouse who is the same age would be insured up to $48,600 annually in 2010.
The 2010 maximum insurance limits apply to all pension plans that terminate next year, even if the employee delays collecting benefits until a future year. If an employer enters bankruptcy proceedings, the date the plan sponsor filed for bankruptcy is used to determine the maximum pension payout for retired workers. Thus, when the PBGC took over the underfunded pension plan of Pueblo International, a retail holding company based in Pompano Beach, Fla., in October 2009, the more than 1,400 former workers and retirees continued to receive pension payments up to 2007’s pension insurance limits, the year the company filed for bankruptcy.