Here is some very good information about your pension and the Pension Benefit Guarantee Commission (PBGC). Many of you have asked what would happen to our pensions if Qwest were to declare bankruptcy...here's some info. Following the message by Curtis Kennedy (below) is some information regarding survivor benefits. It's always good to have a back up plan and know what it is.
December 7, 2004
ASSOCIATION OF U S WEST RETIREES:
Recently, several retirees asked me to explain what the maximum amount of his or her monthly pension benefit from the Qwest Pension Plan is protected or guaranteed by the Pension Benefit Guarantee Corporation.
When ERISA was signed into federal law in 1974, Congress created the Pension Benefit Guarantee Corporation (“PBGC”), an insurer akin to the Federal Deposit Insurance Corporation, to provide some protection for defined benefit pension plans against employer insolvency. The PBGC, an agency (or federal corporation) run by a board that includes the U.S. secretaries of Labor, Treasury and Commerce, receives no funds from general tax revenues, but finances its operations from mandatory insurance premiums paid by companies, like Qwest, that sponsor defined pension benefit plan. The PBGC also receives investment income and recoveries, if any, from employers whose underfunded plans have terminated. When employers who pay insurance premiums to the PBGC can no longer support their pension plans, the agency takes over the assets and liabilities and pays certain minimum pension benefits to the pension plan participants and beneficiaries.
Yesterday, the PBGC announced that the maximum annual benefit for plans taken over in 2005 will be $45,614 for workers who wait until age 65 to retire. This is an increase of 2.8 percent from the 2004 maximum annual payable benefit of $44,386. Thus, someone retiring at age 65 is guaranteed a top payment of $3,801 monthly. Workers who retire earlier than age 65 are guaranteed smaller benefits. There is a chart available at the PBGC website that shows the amounts guaranteed for retirements at age 65, age 62, age 60 and age 55. Go to this URL: http://www.pbgc.gov/services/descriptions/guarantee_table.htm
Presently, the PBGC, insures the pensions of about 44 million workers. In year 2000, the PBGC reported a projected surplus of $9.7 billion. Last month, the PBGC announced that its projected deficit had doubled in 2004 to a record $23.3 billion, as more and more financially failing companies (particularly bankrupt steel companies and airlines) have dumped their pension liabilities onto the agency. The PBGC has reported assets of $39 billion and reported liabilities of $62.3 billion. This announcement sounds a clear warning that there is a possibility of a looming train wreck that could cost the taxpayers untold billions of dollars. But, to date, neither Congress nor the Bush Administration have particularly focused on this problem.
Curtis
CurtisLKennedy@aol.com
303-770-0440
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Does PBGC pay survivor benefits?
PBGC pays survivor benefits if the benefit form you elected (or elect in the future from PBGC) provides for survivor benefits. PBGC will allow all future retirees, whether or not married, to elect a benefit form that provides survivor benefits.
If you are married and die before electing a benefit form, we will pay your surviving spouse a survivor benefit beginning at the earliest date your plan states you can retire. If you are entitled to or are receiving a survivor benefit when your plan ends, PBGC will continue to pay your survivor benefit for the period provided by your plan.
If a person retired at age 50 but the plan did not go to the PBGC until they were age 65 would the retiree receive the full amount or a discounted amount based on their actual age at retirement?
Each year, the PBGC publishes an annual table that shows only a breakdown for coverage at ages 65, 62, 60 and 55. To get an answer to the question, you will need to ask the PBGC:
Customer Service Center
Pension Benefit Guaranty Corporation
1200 K Street, NW
Washington DC 2005-4026
800-400-7242 or 202-326-4000
Curtis et al,
Michael Calebrese did an article for our newsletter several years ago on this subject. His response to this question was: It is the age of the retiree at the time the PBGC takes over the pension payment responsibility.
Nels