I work for a company that may go bankrupt in the foreseeable future. I am eligible for "early retirement" immediately and, although presently working full-time, may find myself out of this job soon. I realize that my pension is guaranteed by PBGC. My question is, if you have to go to PBGC to get your pension money, are you penalized in any way (I heard rumors that you get pennies on the dollar)? Also, is it worthwhile to retire immediatley before we go into bankruptcy and thus get your total pension from PBGC if you are already receiving it when bankruptcy occurs. Thanks for any assistance!
A pensions lawyer has been in here a few times trolling for clients; you might be able to find his website with a web search.http://www.google.com/search?q=pension+recoveryNote: I am not a lawyer, I am not working for him, I am not a client of his; I have no idea whether he is ethical, I have no idea whether he is competent.Have you asked the PBGC itself? According to their website at www.pbgc.gov, most workers will get their full pension, but the maximum payout is limited by law. If you were the CEO, you probably won't get your full pension from PBGC; if you were the janitor you'll probably get the whole thing.Under federal pension law, the maximum pension guaranteed for workers in plans that terminate in 2002 is $3,579.55 a month (or $42,954.60 a year) for persons retiring at age 65. Maximum guarantees are adjusted for those who retire at ages younger or older than 65 or those who elect survivor benefits.
I called and talked to clerks both times and neither could confirm that my pension would match dollar for dollar with what they provide. Their "max" may be a certain amount but their max could be a % of what I would normally get - terminology gets me. I tried to ask both clerks the question but they didn't seem to get what I was saying. e.g., if my pension guaranteed by my company is $1,900 per month, their "max" might be a prorated version or, say, $1,400. When it comes to government, I am always nervous of what they mean, especially when their representatives aren't sure themselves. Thanks for your response, however.
The web site says that if you retire at age 65, no survivorship option, and your pension is under the limit, then it is guaranteed 100%. If you retire early, your benefit is less. I do not know if the PBGC uses the same reduction schedule for early retirement that your company would use if it were healthy.Let's see if I can explain using a hypothetical example..Joe is the CEO of a company. His defined pension benefit is $100,000 a year. The company goes broke right when Joe is age 65. His pension is guaranteed by the PBGC...to a point.You see, the maximum pension payout the PBGC pays out is $47,000 per person. So since Joe's pension was too high for the PBGC to insure it fully, Joe ends up only getting 47% of what he thought he was getting. That 47% number is not written in stone anywhere; it's only because of the ratio of Joe's entitled pension benefit to what the PBGC can pay.Someone with a defined benefit of $1900 per month, age 65, would be paid in full by the PBGC. However, if the person is younger than 65, their amount may vary. You need to contact them with your age and find out what is the maximum monthly payment they would make to you.
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