Background for my question:
My former employer is offering a lump sum option on a pension frozen back int 2000. I've always been someone who researched the nuances, so former coworkers are emailing me with questions. One sent me the following article:
esplanner is usually a reliable source - but in the article they have an example of a guy who must decide between an annuity of $760/month ($9120/year) or $120k lump sum. They state the following:
But were Bill's company and its pension fund to tank, the PBGC would pay only about 40 percent of what Bill would otherwise have received.
I went to the PBGC website and it mentions limits of $59k/year for pension payments on failed plans - but no where does it say that smaller pensions will get a haircut.
Did I miss something on the PBGC website - are all pensions given 40% haircut if the pension fund goes under - or just the larger pension payouts? (Those above $59k).