Pension Benefit Guaranty Corporation rules

The Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of American workers in private-sector defined benefit pension plans. A defined benefit plan provides a specified monthly benefit at retirement, often based on a combination of salary and years of service.

PBGC is not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.

PBGC pays monthly retirement benefits, up to a guaranteed maximum.

The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans ended in 2009, workers who retire at age 65 can receive up to $4,500 a month ($54,000 a year). The guarantee is lower for those who retire early or when there is a benefit for a survivor. The guarantee is increased for those who retire after age 65.

PBGC is headed by a Director who reports to a Board of Directors consisting of the Secretaries of Labor, Commerce and Treasury, with the Secretary of Labor as Chair.


Available benefit choices .
• a straight-life annuity;
• 5-year, 10-year or 15-year certain-and-continuous annuity;
• joint-and-survivor annuity; joint-and-50% survivor "pop-up" annuity;
• automatic" form of benefit offered to you under your plan

You select the form of annuity you want at the time you file your application to begin receiving your pension benefits.

PBGC must receive your application no more than 90 days before the date you requested that your benefits begin.

To find out what your benefit amount would be under the optional forms of annuity call PBGC's Customer Service Center toll-free at 1-800-400-7242 and request a benefit application package.

PBGC will send you the application and the exact benefit calculations to show the amount of your benefit under all of your annuity form options. If you are married, the calculations will also show the amount of your spouse's benefit.
PBGC Guarantee

PBGC guarantees "basic benefits" earned before your plan’s termination date (or the date your employer’s bankruptcy proceeding began, if applicable), which include:
• Pension benefits at normal retirement age
• Most early retirement benefits
• Annuity benefits for survivors of plan participants
• Disability benefits (see exception below)

PBGC does not guarantee:
• Health and welfare benefits
• Vacation pay
• Severance benefits
• Lump-sum death benefits for a death that occurs after the date the plan ended
• Disability benefits for a disability that occurs after the plan’s termination date (or the date your employer’s bankruptcy proceeding began, if applicable)

Legal Limits on PBGC's guarantees
• Generally, PBGC does not guarantee any monthly pension amount that is greater than the monthly benefit your plan would have provided if you had retired at your normal retirement age.
• Higher limits may apply for people who met their plan’s requirements for a disability pension before the plan’s termination date.
• PBGC may not fully guarantee your benefits if your plan was created or amended to increase benefits within five years before its termination date.
• If the plan terminated while your employer was in a bankruptcy proceeding that began on or after September 16, 2006, guarantees are determined as of the date your employer’s bankruptcy proceeding began.

The following are PBGC Maximum Monthly Guarantees for 2009 (assuming participant and spouse are same age), for Life Annuity (L.A) and Joint and 50% Survivor (J&S)

At age 65 L.A. = $4,500.oo, and J&S = $4,050.00
At age 64 L.A. = $4,185.00, and J&S = $3,766.50
At age 63 L.A. = $3,870.00, and J&S = $3,483.00
At age 62 L.A. = $3,555.00, and J&S = $3,199.50
At age 61 L.A. = $3,240.00, and J&S = $2,916.00
At age 60 L.A. = $2,925.00, and J&S = $2,632.50
At age 59 L.A. = $2,745.00, and J&S = $2,470.50
At age 58 L.A. = $2,565.00, and J&S = $2,308.50
At age 57 L.A. = $2,385.00, and J&S = $2,146.50
At age 56 L.A. = $2,205.00, and J&S = $1,984.50
At age 55 L.A. = $2,025.00, and J&S = $1,822.50


All the above and further information can be obtained by clicking on the PBGC link on this page or entering http://www.pbgc.gov/ into your browser.

Pension Victims

People who are members of a defined benefit pension plan generally think that when they retire they will receive all the benefits promised them. As I found out when I retired some of those benefits are paid out of the company funds and as a result they are fully dependent on the company’s continuing health. When Nortel went into chapter 11 protection, I and many others lost a part of that promised benefit.

Many retirees will have to face the prospect of dealing with the bankruptcy court to claim lost benefits. This procedure is not simple, and the lack of communications from Nortel and the bankruptcy-solutions company supporting the court has not helped the situation. Many people are lost as to what to do.

Fortunately many retirees and ex-Nortel employees have set up informal and formal networks to ensure that everyone knows what is going on and are helping one another in terms of the process. Others however are unaware of the potential impact.

Particularly badly hit are the widows and widowers of retirees. Many have been out of touch with the company for a long time, with their only contact being their pension checks or the health care plan. Some are only finding out about the situation when their checks stop and others are unaware of the potential impacts on them. Coupled with that, the need to access a web site and search for information is not an easy task for many.

I raise this point because there may be people you know who need some assistance. I urge all of my readers to check up on your old friends and colleagues from Nortel to make sure they know what to do to protect their interests. Since I became involved in this I have received many emails and phone calls and I know that there are people out there who need your help. Let’s use the spirit of the old Nortel in helping our friends as they face the new age and new persona at Nortel.

Proof of Claim forms for Nortel US creditors

When Nortel entered Chapter 11 many of us became unsecured creditors. This happened when Nortel ceased to pay non-qualified pensions,and severance, and prevented access to deferred compensation, plus other categories.

In order to have our claims recognized and considered in the final court settlements it is essential that all creditors lodge their proof of claim with the company responsible for the court dockets:- Epiqsystems.

Over the last six months many people have completed proof of claim forms and submitted them to Epiqsystems. Many of us have been waiting for decisions to be made in terms of the method of calculation and also the reference bar code needed for the forms.

Nortel has petitioned the court to hear their case on August 4th regarding the deadline for submitting the proof of claims forms. If the court agrees with the proposed bar date of September 30th, Epiqsystems will start sending out forms with the official barcode on them to all creditors on their list.

I confirmed this information today by phoning Epiqsystems and they think it will be in the first or second week of August that they will send out the forms. This still gives us at least a month to complete the forms and send them back in. Check the EpiqSystem website at chapter11.epiqsystems.com/nortel for the address to send the claims form.

In the meantime you need to get prepared to calculate your claim and gather up all the supporting documentation to go with it. The NRPC steering committee will be giving an update through the web site www.nnra.org as soon as they hear from Segal as to how the claims will be calculated. Please check that site to look for updates and as soon as I hear I will publish it here also.