PBGC takeover and maximum benefit

[Guest BruceCM]

Hello

This is my first time on this board, so I appreciate any help on my question.

I understand the PBGC has a maximum benefit that this year is somewhere in the low $40,000 range. If so, what would happen to a Delta airline pilot who has been a participant in their DBP for the last many years, is within a year of retirement and his last 3 year average earnings were $120,000. If Delta's plan gets taken over by PBGC, are people like him just out of luck, or is there a provision to provide a higher annuity than the PBGC maximum?

And for those employees whose benefit would be in excess of the PBGC maximum....does PBGC just truncate them back to their max...or is it proportionate...that is, if their benefit would have been 50% of the maximum ($170,000 this year), would the PBGC benefit then be 50% of their max?

Is there a good online source for this kind of information?

Thanks very much for any help in understanding this somewhat difficult topic.

Bruce Miller, CFP

[david rigby]

Some prior discussion (there may be others, feel free to use the Search feature):

http://benefitslink.com/boards/index.php?showtopic=22510

...is there a provision to provide a higher annuity than the PBGC maximum?

There is no provision for the PBGC to provide a benefit higher than the PBGC maximum. Delta is just one of many sad examples where the plan sponsor (in this case, in collusion with the pilots' union) promised more than it could pay for, effectively requiring future management and/or employees and/or customers and/or profits to be responsible for it.

PBGC has some very good reading here.