PBGC maximum amounts guaranteed

The Pension Benefit Guarantee Corporation (PBGC) is a government entity which guarantees traditional pensions up to certain limits. The monthly maximum payments for plans which fail in 2009 can be found here . As you can see these maximums strongly depend on your age in 2009. For example at 55 the maximum is $2025/month, at 60 the maximum is $2925/month and at 65 the maximum is $4500/month.

The above site explains these reductions as follows:

The maximum amount is lower for benefits commencing at ages below 65, reflecting the fact that younger retirees receive more monthly pension checks over a longer expected remaining lifespan. The maximum amount is higher for benefits commencing at ages above 65, reflecting the fact that older retirees receive fewer monthly pension checks over their expected remaining lifespan.

But in fact the reductions are much greater than needed to equalize the present value. According to this annuity calculator (for a New York state male, quotes obtained on 3/2/09), a single life annuity paying $2025/month to a 55 year old has present value $331948, a single life annuity paying $2925/month to a 60 year old has present value $445704 and a single life annuity paying $4500/month to a 65 year old has present value $622755. So in fact the limits strongly favor older retirees.

In my case this means I best hope the large American technology company stays solvent for a few years.