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AGENCY HELPS WHEN BENEFITS FAIL
By DOLORES KONG
10/28/2001
The Boston Globe
There are few guarantees in life, as employees of the
once-mighty corporations of Polaroid and Bethlehem
Steel found out with the firms' bankruptcy filings
this month.
The security of a regular paycheck, a generous
pension, health benefits and other perks is proving
illusory, and so is a career spent working at these
former titans of industry.
But there is at least one limited guarantee for some
employees, in the form of the Pension Benefit Guaranty
Corporation, a federal agency created in 1974 to
insure certain private pension plans.
PBGC covers more than 43 million workers and retirees
participating in nearly 38,000 so-called defined
benefit pension plans, which promise to pay a specific
monthly benefit at retirement.
The maximum monthly guarantee by PBGC varies by the
age of the participant and the year the pension plan
terminated. For instance, for a pension plan that ends
this year, the maximum monthly amount for someone at
age 65 is $3,392.05, and for someone at age 55,
$1,526.42. The agency also covers certain disability
and survivor benefits.
But PBGC does not cover any of the other promises a
corporation makes to its employees or retirees in the
form of health coverage, life insurance, or other
benefits.
While it's too soon for PBGC to enter the picture for
Polaroid and Bethlehem Steel workers, the agency is
playing a role in the lives of employees and retirees
recently affected by other corporations going
bankrupt.
For instance, this month in Boston and Philadelphia,
PBGC met with former workers and retirees covered by
the retirement plan for Bradlees Stores Inc. The
agency took over the plan, which covers 8,000 people
and is underfunded by about $12 million, on May 14,
and has continued uninterrupted payment of benefits to
retirees.
If you think you have pension benefits that may be due
you, check the agency's Web site at www.pbgc.gov or
call 1-800-400-7242.
You may also get help from the New England Pension
Assistance Project, located at the University of
Massachusetts in Boston, and largely funded by the US
Administration on Aging. The project's phone number is
1-888-425-6067.
A raise for retirees
Unlike some other sources of retirement and disability
income, Social Security increases every year with a
cost-of-living adjustment, helping more than 50
million Americans on a fixed income keep up with
inflation.
In 2002, the checks will grow by 2.6 percent, the
amount of the past year's consumer price index
increase, the Social Security Administration announced
last week.
That means an extra $22 a month in the average
individual retiree's Social Security check, bringing
it to $874, and an additional $36 for the average
couple's check, bringing it to $1,454.
The maximum federal Supplemental Security Income (SSI)
monthly payment for a disabled individual will go from
$531 to $545, and for a couple, from $796 to $817.
"The annual cost-of-living adjustment [COLA] is one of
the most critically important features of the Social
Security program," said Larry G. Massanari, acting
Social Security commissioner, in announcing the
increase.
In another automatic adjustment in the Social Security
program, the maximum amount of workers' earnings that
come under the 6.2 percent tax for the retirement and
disability portion of the program will increase from
$80,400 to $84,900 next year. (The 1.45 percent tax
for the Medicare portion of the program continues to
be levied on all earnings.)
That increase means 10.5 million higher-income workers
could see their Social Security tax for 2002 go up by
a maximum of $279 if they work for a company, and by a
maximum of $558 if they are self- employed. The
increase in maximum taxable earnings to $84,900,
representing a 5.6 percent jump, is based on the
increase in average US wages.