Options when the government takes over your pension
A pension administered by the Pension Benefit Guaranty Corporation
(PBGC) is much like a corporate pension. A retiree can choose from
a variety of options to receive benefits. They include:
1) A straight-life annuity that gives a retiree a fixed monthly
benefit for the retiree's lifetime. This has the largest monthly
payout, but does not include a survivor benefit.
2) A five-year, 10-year or 15-year certain-and-continuous annuity.
Like the straight-life annuity, this provides you with a monthly
benefit for the remainder of your life. If you die before the period
you select is over, then your designated beneficiary will receive
the same monthly payout for the remainder of the period. If you
die after the end of the period, then the benefit payments end upon
your death and your beneficiary receives nothing.
3) A joint-and-survivor annuity provides a retiree with fixed monthly
benefit payments and upon the retiree's death, continues payments
to the retiree's spouse or other designated beneficiary for the
rest of his or her life. The monthly benefit your spouse or other
beneficiary receives is 50 percent, 75 percent or 100 percent (you
choose the percentage) of the amount you were receiving while you
were alive. The higher the percentage you opt to give your spouse
after your death, the smaller your pension will be.
4) A joint-and-50 percent survivor "pop-up" annuity is
similar to the joint-and-survivor annuity described above except
that if your spouse dies before you, your monthly benefit "pops-up"
to the straight life annuity amount for the rest of your life.
Jenny C. McCune is a contributing editor based in Montana.