For a single-employer plan that terminates in 2026, the Pension Benefit Guaranty Corporation guarantees up to $7,789.77 a month for a straight-life annuity starting at 65. Most private-sector retirees get far less than that, so for them the guarantee covers everything. For people with large benefits, early start dates or multiemployer plans, the details matter.
How the limit is set
The maximum is set by formula in ERISA and indexed to the Social Security contribution and benefit base, which tracks wage growth. It applies as of the plan's termination date (or, in some bankruptcy cases, the date the sponsor entered bankruptcy). So the limit that matters to you is the one for the year your plan terminates, not the year you retire.
Lower limits for earlier starts and survivor forms
The $7,789.77 figure is for payments starting at 65 as a single-life annuity. PBGC's 2026 table is lower for earlier starts:
- Age 62: $6,153.92 a month
- Age 60: $5,063.35
- Age 55: $3,505.40
A joint and 50% survivor annuity has a lower cap too: $7,010.79 at 65 when both spouses are 65. Later starts get higher caps, $12,931.02 at 70.
This matters most for people who take early retirement packages. Someone starting a large benefit at 55 has less than half the guarantee of someone starting at 65.
Who the limit actually affects
- Long-service, high-paid employees in final-pay plans whose benefits exceed the cap for their start age and form.
- Early retirees, because of the lower age-based caps.
- Executives with supplemental plans. Nonqualified SERPs and excess benefit plans aren't insured by PBGC at all, and in a bankruptcy those participants are unsecured creditors.
Multiemployer plans
Union multiemployer plans are insured under a separate PBGC program with much lower limits. The guarantee is 100% of the first $11 of your monthly benefit rate per year of service plus 75% of the next $33, for a maximum of $35.75 a month per year of service. Thirty years gets you at most $1,072.50 a month. The American Rescue Plan Act of 2021 created Special Financial Assistance for the most troubled multiemployer plans. Central States, the largest, got about $35.8 billion of it, approved in December 2022.
When your pension moves to an insurer
When a sponsor buys a group annuity and transfers retirees to an insurer, PBGC coverage ends for those people. Their payments then depend on the insurer and on state insurance guaranty associations, which commonly protect annuity benefits up to $250,000 in present value per person, with higher limits in some states.
These transfers are common. AT&T moved $8.067 billion of obligations to Athene in 2023. Lockheed Martin bought Athene annuities in 2021 and 2022 and converted $943 million more to buy-outs in December 2025. GM paid Prudential a $25.1 billion premium in 2012. Your employer's 10-K and 8-K filings will say whether your group was included.
How PBGC takes over a plan
A sponsor in financial distress can apply for a distress termination, and PBGC can also start an involuntary termination when a plan can't pay benefits or would cause PBGC an unreasonable loss. Either way, PBGC becomes trustee, works out each person's guaranteed benefit and starts paying. That review can take time, and people above the cap get letters explaining the reduced amount.
PBGC generally pays annuities, not lump sums, except for small benefits under its de minimis rules. A lump sum option in the original plan doesn't carry over.
Survivor benefits after a PBGC takeover
The cap applies to the form of payment, and joint and survivor forms have lower caps. Take someone whose plan would have paid $9,000 a month at 65 as a joint and 50% survivor annuity. If the plan terminates in 2026, the most PBGC guarantees is $7,010.79 a month while both are alive (assuming both spouses are 65), and the survivor gets half of the guaranteed amount, about $3,505 a month, not half of $9,000.
Funding notices
Single-employer plans send an annual funding notice with the plan's funding percentage and its assets and liabilities. Under IRC 436, a plan below 80% on its adjusted funding target attainment percentage can pay only part of a benefit as a lump sum, and below 60% none. Multiemployer plans are classified as endangered, seriously endangered, critical, or critical and declining, and plans in critical status can cut some benefits. Keep your notices.
What PBGC doesn't cover
PBGC insures private defined benefit plans only. 401(k)s and other defined contribution plans aren't insured, but their assets are held in trust, separate from the employer. Government plans, including every state teacher and employee system, aren't covered by PBGC either. Their protection comes from state law.
The coverage gap
If your benefit is above the cap for your age and form, the gap is the uninsured part. A 65-year-old with a $10,000 single-life benefit has $2,210.23 a month above the 2026 cap. That only becomes a loss if the plan terminates without enough money, which is rare for well-funded plans at strong employers, but it's a real consideration at a weak one. Taking a lump sum, if your plan offers it, removes the exposure.
Claiming from PBGC
If your plan is already trusteed by PBGC, keep your address current in My PBGC at pbgc.gov and call 1-800-400-7242 a few months before you want benefits to start. You'll need proof of age and, if married, of marriage. If you think PBGC's figure is wrong, gather old benefit statements, pay records and service history and use PBGC's appeals process within its deadline.
Taxes and Medicare
PBGC payments are taxed like any pension: ordinary income federally, and by your state under its pension rules. Nine states don't tax pension income at all, and several others exempt most of it. PBGC income also counts toward Medicare's IRMAA. For 2026, IRMAA starts above $109,000 of modified AGI for single filers ($218,000 joint) and adds from about $1,148 to $6,936 per person per year in Part B and Part D surcharges. Use the IRMAA calculator to check yours.
PBGC benefits don't reduce Social Security. Model the two together with the Social Security calculator, and use the present value calculator to see what your benefit is worth next to the guarantee.