1

PBGC’s Single-Employer 

Guarantee Outcomes

May, 2019
PBGC’s Single-Employer Guarantee Outcomes

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SUMMARY

The Pension Benefit Guaranty Corporation (PBGC) guarantees pensions of participants in most private 

sector defined benefit pension plans through two separate programs, for single-employer and for 

multiemployer plans. Guarantees in these programs are subject to limitations set by law and regulation. 

PBGC previously studied the outcome of these limitations on participant guaranteed benefits for the 

single-employer program, in 2008,0F

1 and for the multiemployer program, in 2015.1F2 This study updates 

the information on single-employer guarantee outcomes to reflect additional program experience.

Major Findings:

• A substantial majority (84 percent) of participants received 100 percent of the vested benefits 

they had earned under their plans.

• 16 percent of vested participants had benefits reduced by one or more of the limitations

considered in the current study.

• For all participants affected by a limitation, the average reduction in the value of plan 

benefits was 24 percent. For retirees affected by a limitation the average reduction in 

value was 19 percent.

• 89 percent of reductions in the value of plan benefits were concentrated in just 10 

plans.

• 59 percent of the plans in this study had at least one participant whose benefits were reduced by 

one or more primary limitation provisions.

The study reviewed participant outcomes in 500 plans trusteed by PBGC between 1988 and 2012. In 

total these plans covered 1,142,700 participants, more than half of the participants in plans PBGC has 

trusteed over its history. 

Three limitations — the Accrued-at-Normal Limitation, the Maximum Insurance Limitation, and the 

Phase-in Limitation — accounted for almost all of the participant benefit reductions. For participants 

with a reduction in vested benefits, these three major limitations reduced the value of benefits by an 

average of 23 percent compared with 24 percent for all limitations studied.

The study expands the previous (2008) study of 525,000 participants in 125 plans trusteed by PBGC 

from 1990 to 2005. Findings of this study are broadly comparable with those of the 2008 study despite 

broadening its scope and methodology. 

 

1 This report is the third formal analysis of single-employer guarantee outcomes. The first analysis was included in the 1999 

edition of PBGC’s Pension Insurance Data Book. Data books may be accessed at https://www.pbgc.gov/prac/data-books 

The second analysis was published in the 2006 edition of PBGC’s Pension Insurance Data Book, with an update published as 

a report titled “PBGC’s Guarantee Limits – an Update,” completed in September 2008 

(https://www.pbgc.gov/sites/default/files/legacy/docs/guaranteelimits.pdf. 2 Available at https://www.pbgc.gov/sites/default/files/legacy/docs/2015-ME-Guarantee-Study-Final.pdf
PBGC’s Single-Employer Guarantee Outcomes

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Contents

Summary................................................................................................................................ i

PBGC’s Benefit Limitations .................................................................................................... 1

Background ......................................................................................................................... 1

Primary Guarantee Limitations........................................................................................... 1

The Accrued-at-Normal Limitation ..................................................................................... 1

The Maximum Insurance Limitation................................................................................... 2

The Phase-In Limitation ...................................................................................................... 2

Other PBGC Limitations...................................................................................................... 3

Benefits Exceeding PBGC’s Guarantees.............................................................................. 4

Results of Study..................................................................................................................... 5

Overall Results .................................................................................................................... 5

Participants......................................................................................................................... 5

Trusteed Plans..................................................................................................................... 8

Analysis by Primary Limitation.......................................................................................... 10

Accrued-at-Normal Limitation.......................................................................................... 10

Maximum Insurance Limitation........................................................................................ 10

Phase-In Limitation ........................................................................................................... 11

More Than One Limitation................................................................................................ 12

Trends Over Time.............................................................................................................. 12

Results by Industry............................................................................................................ 14

Methodology....................................................................................................................... 21

Data Sources..................................................................................................................... 21

Selection of Plans.............................................................................................................. 21

Use of Present Values....................................................................................................... 22

Changes in Methodology from Prior (2008) Study........................................................... 23

Summary Information for Plans and Participants Studied ............................................... 24

Conclusions......................................................................................................................... 26
PBGC’s Single-Employer Guarantee Outcomes

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Tables

Table 1 - Participants with Benefits Reduced by One or More Primary Benefit Limitations, by Participant Status 

and Limitation _________________________________________________________________________________ 5

Table 2 - Average Benefit Reduction for Participants, by Primary Benefit Limitation and Status _______________ 6

Table 3 - Participant Benefit Reductions by Limitation ________________________________________________ 7

Table 4 - Distribution of Participants by Percentage Reduction in Value of Benefits _________________________ 7

Table 5 - Plans Affected by Primary Benefit Limitations _______________________________________________ 9

Table 6 - Impact of Accrued-at-Normal Limitation on Benefits of Affected Participants _____________________ 10

Table 7 - Impact of Maximum Insurance Limitation on Benefits of Affected Participants_____________________ 11

Table 8 - Impact of Phase-In Limitation on Benefits of Affected Participants ______________________________ 12

Table 9 – Value of Benefit Losses for Ten Plans Which Account for Most Reductions in Value ________________ 14

Table 10 - Participants with Benefits Reduced by One or More Primary Benefit Limitation, by Industry and 

Limitation ___________________________________________________________________________________ 15

Table 11 - Average Benefit Reduction for Participants Whose Benefits Were Reduced by One or More Primary 

Benefit Limitation, by Industry and Limitation ______________________________________________________ 16

Table 12 - Number of Participants with Benefits Reduced by One or More Primary Benefit Limitation, by Industry, 

Participant Status and Limitation_________________________________________________________________ 19

Table 13 - PBGC Trusteed Plans and Vested Participants Compared with Plans Included in Study ____________ 22

Figures

Figure 1 - Maximum Insurance Limitation Accounts for Most of Largest Benefit Reductions.....................................8

Figure 2 - Number of Participants Affected by Primary Limitation by Participant Status...........................................9

Figure 3 – Guarantee Outcome Trends over Time .....................................................................................................13

Figure 4 – Ten Plans Account for Most of the Reductions in Benefit Value ...............................................................14

Figure 5 - Benefit Reductions Are Primarily in Three Industries...............................................................................17

Figure 6 - Relative Importance of Primary Benefit Limitations Varies Across Industry ............................................17

Figure 7 - Participants Included in Study by Year......................................................................................................24

Figure 8 - Plans Included in Study by Year ................................................................................................................25
PBGC’s Single-Employer Guarantee Outcomes

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PBGC’S BENEFIT LIMITATIONS

Background

When a single-employer pension plan fails, PBGC assumes responsibility for the plan’s assets 

and the payment of benefits to plan participants and their beneficiaries. PBGC determines, on a 

participant-by-participant basis, the benefits to which each participant or beneficiary was entitled

when the plan ended.

PBGC pays participants the pension benefits they had accrued under the terms of their plan, 

subject to certain constraints set by Title IV of the Employee Retirement Income Security Act of 

1974, as amended (ERISA) and by PBGC’s implementing regulations. Prior to the Pension 

Protection Act of 2006 (PPA) constraints on the amounts guaranteed were generally applied as of 

the date the plan terminated; PPA determines guarantee limits based on the earlier of a 

bankruptcy filing date for the plan sponsor or the date of plan termination.

Most plans that terminate have enough assets to provide the full value of accrued benefits to all 

participants, by purchasing annuities or through the provision of lump sum benefits. These plans

terminate in a “standard termination.” The guarantee limits only come into play when a plan 

fails, and even then, only if the benefit is not payable using the assets available in the plan when 

it terminated as allocated using the "priority categories" process required by ERISA. The better 

funded a plan is when it terminates, the less the impact of guarantee limits on participant 

benefits.

Primary Guarantee Limitations 

There are three guarantee limitations that account for most of the benefit reductions experienced 

by vested participants. They are the Accrued-at-Normal Limitation, the Maximum Insurance 

Limitation, and the Phase-In Limitation. A number of other limitations also may apply, but 

typically only in limited situations, accounting for only a small fraction of total benefit 

reductions. Participants in a plan may be affected by different primary limitations, or by more 

than one. For a participant to whom multiple primary limitations could apply, PBGC applies the 

Accrued-at-Normal Limitation first, followed by the Maximum Insurance Limitation and then 

the Phase-In Limitation.

The Accrued-at-Normal Limitation

The Accrued-at-Normal Limitation (“AAN Limitation”) constrains the benefits PBGC 

guarantees to a monthly amount no greater than the monthly benefit provided as a straight life 

annuity available at the plan’s normal retirement age. The portion of any combined early 

retirement benefit and supplemental benefit that exceeds this amount is not guaranteed by 

PBGC.2F

3

 

3 Plans in certain industries, such as steel and motor vehicle equipment manufacturing, often pay early retirees a 

supplemental benefit until they become eligible for Social Security benefits.
PBGC’s Single-Employer Guarantee Outcomes

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For example, assume that a plan entitles a participant to a straight life annuity of $1,000 per 

month at the plan’s normal retirement age of 65. Suppose further that, if she retires at age 60, she 

is entitled to an early retirement benefit of $750 per month and a temporary supplemental benefit 

of $400 per month between the ages of 60 and 62. Her total benefit under the plan from age 60 to 

age 62 would be $1,150 per month. Application of the AAN Limitation reduces the supplemental 

benefit payable by $150. In this case, PBGC guarantees a benefit of $1,000 per month from age 

60 to age 62, instead of $1,150. On and after age 62, PBGC guarantees a monthly benefit of 

$750, the same amount she would have received from the plan, had it not terminated.

The Maximum Insurance Limitation

The Maximum Insurance Limitation (“Max Limitation”) puts a dollar cap on the benefits PBGC 

guarantees. The amount of the maximum guaranteed benefit depends on the calendar year in 

which the underfunded plan terminates.3F

4 The maximum benefit guarantee is adjusted yearly but 

is fixed for any plan once that plan terminates.4F

5 For a plan terminating in 2019, the maximum 

benefit guarantee is $67,295 per year, for a straight-life annuity that PBGC begins paying at age 

65. The guarantee is actuarially reduced for those who begin receiving benefits from PBGC at 

younger ages or who receive a benefit that includes a survivor benefit. The guarantee is 

actuarially increased for those who first receive benefits from PBGC at older ages. The 

participants whose benefits are affected by the Max Limitation tend to be those with high 

salaries, those whose plans provide very generous benefits, and those who were relatively young 

as of the plan termination date and were eligible for subsidized or unreduced early retirement 

benefits under their plans.5F

6

The Phase-In Limitation

The Phase-In Limitation restricts recent plan benefit improvements provided through a plan 

amendment.6F

7 Although any type of plan can be amended to improve benefits, collectively 

bargained plans often regularly increase benefits in this manner, making them more likely than

non-bargained plans to be subject to the Phase-In Limitation. PBGC fully covers benefit 

improvements that were both adopted and effective more than five years prior to the date of the 

plan’s termination. It does not cover any benefit increase implemented through a plan 

amendment that was made within one year of the date of the plan termination. For benefit 

improvements that became effective (or that the sponsor adopted, if later) more than one year but 

 

4 PPA modified this provision. If the sponsor entered bankruptcy after September 16, 2006, and the plan terminates 

while the sponsor is in bankruptcy, the maximum benefit guarantee will be based on the calendar year the sponsor 

entered bankruptcy. 5 The maximum guaranteed amount is adjusted annually based on changes in the Social Security “Old-law” 

contribution and benefit base. The “Old-law” base does not reflect the 1977 amendments to the Social Security Act.

6 E.g., an individual who is age 55 at plan termination and retired under a “30 and out” plan that allows a participant 

to retire at any age with unreduced benefits after completing 30 years of service with the plan’s sponsor.

7 The bankruptcy provision of PPA also applies to the Phase-In Limitation. If the plan terminates while the 

employer is in bankruptcy, the date of the bankruptcy filing (if after September 16, 2006) will be treated as the 

termination date. PPA also applied this limitation to payments for “unpredictable contingent event benefits” that are 

triggered by a specific event, such as a plant shutdown. The trigger date begins the five-year phase-in period. 
PBGC’s Single-Employer Guarantee Outcomes

3

less than five years prior to the plan’s termination, PBGC guarantees the greater of 20 percent of 

the benefit increase or $20 per month of the increase for each full year the increase was in 

effect.7F

8

Other PBGC Limitations

The following additional PBGC limitations may also reduce a participant’s benefit. Generally,

they affect a small number of participants included in this study or have a small impact on the 

amount a participant’s benefit is reduced and are not individually quantified. They are referred to 

collectively as “Other Limitations.”

• Aggregate Maximum Limitation – If an individual was a participant in multiple PBGCtrusteed plans, the Aggregate Maximum Limitation sets a maximum monthly amount that 

the individual can receive from all plans combined.

• Substantial/Majority Owner Limitation – Participants who were substantial/majority 

owners in the plan are subject to a special phase-in of their benefit.

• Special Payments – Many steel plans provide a provision allowing for the lump sum 

payment of three months of the participant’s salary in lieu of the first three months of 

pension payments. PBGC does not guarantee Special Payments.

• Cost of Living Adjustments (COLA) – PBGC will not guarantee COLAs after plan 

termination.

• Grow-in Benefits - Grow-in benefits exist when a participant has not satisfied the 

conditions for entitlement (typically more favorable early retirement reduction factors) as 

of the date of plan termination but may “grow-in” to the benefit if his employment with 

the plan sponsor continues (the plan sponsor must remain ongoing after plan termination

for a participant to have a grow-in benefit). PBGC does not guarantee grow-in benefits. 

• Death Benefits – Death benefits in excess of the plan’s Qualified Pre-retirement Survivor 

Annuity benefit, such as a lump sum death benefit equal to the present value of 

participant’s monthly benefit, are not guaranteed by PBGC.

• Additional Limitation Introduced by the Pension Protection Act of 2006 – If a participant 

becomes entitled to benefits between the date the sponsor filed for bankruptcy and the 

date of plan termination, PBGC’s guarantees are determined as of the bankruptcy filing 

date for plans whose sponsors enter bankruptcy after September 16, 2006 and are in 

bankruptcy when the plan terminates. This change is reflected both in the Primary Benefit 

Limitations and in Other Limitations.

In addition, PBGC does not guarantee benefits for participants that are not yet vested prior to

plan termination. The impact of this limitation is not reviewed by this study; benefit losses due 

to participants that are not vested as of plan termination are not included in the amounts shown 

as benefit losses, nor are plans counted as impacted by benefit limitations due to the loss of nonvested benefits.

 

8 A less generous phase-in provision is applicable for substantial owners of companies that sponsored PBGCtrusteed plans. The substantial owner provision was changed to a majority owner provision by PPA. It now applies 

to fewer owners and is less onerous when it does apply. This type of phase-in is rarely applicable to participants in 

large plans.
PBGC’s Single-Employer Guarantee Outcomes

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Benefits Exceeding PBGC’s Guarantees

Some participants in PBGC-trusteed plans receive benefits that exceed the PBGC guarantee 

level. This can occur if the plan has enough assets to fund benefits above the guarantee or if 

PBGC recovers, or is deemed to recover, additional funds through collection on its claims 

against the plan sponsor, in or outside of bankruptcy proceedings. Recoveries are shared with 

participants according to a specified formula, and the participants’ share is used to fund benefits 

that exceed PBGC’s guarantee.8F

9

The allocation of assets and recoveries to fund benefits follows ERISA’s priority categories. 

Generally, benefits limited by the Phase-In Limitation (i.e., which have not been in effect for a 

full five years) are assigned a limited priority which is, at best, fifth out of ERISA’s six priority 

classes. Benefits subject to the AAN or Max Limitations often have a higher priority. Since 

assets and recoveries are rarely sufficient to restore all benefits lost to limitations, some benefit

reductions that would otherwise have occurred due to the AAN and Max Limitations may not 

occur in a plan in which the Phase-In Limitations have full effect.

Both the order in which limitations are applied and the allocation of assets and recoveries affect 

participant outcomes and are reflected in the attribution of any benefit losses shown in the report.

 

9 PPA changed this provision so that, for plans whose sponsors enter bankruptcy after September 16, 2006 and are 

in bankruptcy when the plan terminates, the date the sponsor entered bankruptcy proceedings will be used to assign 

participants to some of the priority categories that PBGC uses to allocate any available plan assets and employer 

recoveries.
PBGC’s Single-Employer Guarantee Outcomes

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RESULTS OF STUDY

Overall Results

Participants

A substantial majority of vested participants receive 100 percent of their accrued vested benefit. This 

study found that the benefits of 84 percent of vested participants were not reduced by any PBGC benefit 

limitation. In the sample of 1,142,700 vested participants, the remaining 16 percent of vested 

participants, about 187,000, had their accrued benefits reduced by one or more of the primary benefit 

limitation provisions. On average, these participants’ benefits were reduced by the primary benefit 

limitations by 23 percent.

Participants who were active in their plan at the time of plan termination were most likely to face 

reductions in their benefits. As shown in Table 1, 30 percent of active vested participants included in 

this study had their benefits reduced compared to 19 percent of retirees and only 4 percent of separated 

vested participants.9F

10 More than half of all participants with a reduced benefit were impacted by the 

Phase-In Limitation. About 9 percent of participants with reduced benefits (less than 2 percent of all 

participants in the study) were affected by two or all three of the limitation provisions. 

Table 1 - Participants with Benefits Reduced by One or More Primary Benefit Limitations, by 

Participant Status and Limitation

Participant

Status

Number of 

Participants

Percent of Participants Affected By:

At Least One 

Primary 

Limitation

AAN 

Limitation

Max 

Limitation

Phase-In 

Limitation

Retired 493,400 19% 6% 4% 12%

Separated 395,900 4% 1% 0% 3%

Active 253,400 30% 3% 9% 19%

All Participants 1,142,700 16% 4% 4% 10%

Note: Some participants had their benefits reduced by more than one limitation provision.

Table 1 shows that 16 percent of all participants in the study were affected by at least one primary 

limitation. Table 2 and Table 3 show the average reduction in benefits that results from limitations on 

the guarantee. 

In Table 2, the number of participants whose benefits were limited by each of the primary benefit 

 

10 An exception to the general pattern occurs in the Motor Vehicle Equipment industry, where retirees received a larger 

reduction than active workers due to the effect of the AAN Limitation. This is primarily a reflection of the demographics of 

the Delphi plans, which had a large number of younger retirees still receiving early retirement supplements as of plan 

termination, and insufficient plan assets to otherwise cover them. For more information on specific industries see Table 10

and the discussion of Results by Industry beginning on page 14.
PBGC’s Single-Employer Guarantee Outcomes

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limitations is shown by participant status. The right-hand portion of the table summarizes the average 

percent reduction in the lifetime value of benefits caused by each of the primary benefit limitation 

provisions. 

For participants affected by the limitations, the value of their benefits was reduced by a primary 

limitation by, on average, 23 percent. This average10F

11 covers a wide range of benefit reductions. 

Table 2 - Average Benefit Reduction for Participants, by Primary Benefit Limitation and Status

Participant

Status

Number of 

Participants with 

Reduced Benefits

Average Percent Reduction in Benefit Value From:

All Primary 

Limitations

AAN 

Limitation

Max 

Limitation

Phase-In 

Limitation

Retired 96,000 19% 12% 22% 11%

Separated 15,500 18% 7% 26% 16%

Active 75,500 30% 7% 37% 12%

All Participants 187,000 23% 11% 30% 12%

The limitation with the largest impact on participants’ benefits is the Maximum Limitation, reducing 

benefit values by an average of 30 percent, when it applies.

Table 3 provides additional detail on benefit limitations as shown by primary limitation, and the various 

combinations of the primary limitations. It also shows the amount of benefit reductions due to 

limitations other than the three primary limitations in the bottom half of the table. The average 

reduction by these four categories of limitations (the three primary benefit limitations as well as those 

due to Other Limitations) is shown as a pale blue row in the table; the total average reduction shown is 

the sum of the average reductions for each limitation in the column below.

 

11 Throughout this report the average benefit reductions shown are calculated on the basis of the reduction in the present 

value of benefits for participants as of the date the plan terminated. This weights the amount of the average benefit cuts based 

on the present value of each participant’s expected stream of benefit payments -- i.e., it is the “liability-weighted” average 

loss due to the limitations on the guarantee. The liability-weighted average is dominated by participants with the largest 

benefit reductions, which is the group subject to the Maximum Insurance Limitation. If we instead reported the average cut 

in benefits for the average participant (a “participant-weighted” average), the average cut would be lower – 17 percent instead 

of the 23 percent calculated above.
PBGC’s Single-Employer Guarantee Outcomes

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Table 3 - Participant Benefit Reductions by Limitation 

Limitation(s):

AAN

Limitation

Max

Limitation

Phase-In

Limitation

AAN 

& Max

AAN & 

Phase-In

Max & 

Phase-In

AAN, Max 

& Phase-In Total

Number 

Affected 32,083 32,622 105,792 3,864 5,201 4,558 2,893 187,013

Percent 

Affected 2.8% 2.9% 9.3% 0.3% 0.5% 0.4% 0.3% 16.4%

Average 

Reduction 13.3% 33.5% 12.6% 26.6% 23.0% 24.0% 35.4% 23.6%

AAN 13.3% 0.0% 0.0% 9.0% 7.4% 0.0% 5.8% 3.0%

Max 0.0% 33.1% 0.0% 17.5% 0.0% 14.7% 17.5% 15.8%

Phase-In 0.0% 0.0% 11.6% 0.0% 15.6% 8.9% 12.0% 4.3%

Other 0.0% 0.4% 1.0% 0.1% 0.0% 0.4% 0.0% 0.5%

Adding the impact of Other Limitations to the three primary guarantee limitations increases the 

percentage reduction in benefits for affected participants from 23 percent to 24 percent (rounded from 

23.6 percent in the table above). Most of the impact of the Other Limitations is concentrated in benefit 

reductions for active participants, whose benefits were reduced, on average, by an additional 1 percent 

due to the Other Limitations (from 30 percent for Actives as shown in Table 2 to 31 percent). The 

impact of Other Limitations on separated vested participants and on retirees was, on average, much 

smaller (adding 0.2 percent to the average benefit reduction for affected separated vested participants 

and 0.03 percent for affected retirees).

Given the small impact of Other Limitations on the results, the remainder of the report examines solely 

the impact of the three primary benefit limitations on guarantee outcomes.

Table 4 - Distribution of Participants by Percentage Reduction in Value of Benefits

Number of 

Participants

Percent of All 

Participants

Percent of Those with 

a Benefit Reduction

 Total 1,142,700 100.0% Not Applicable

 No Reduction 955,700 83.6% Not Applicable

 Total with a Reduction 187,000 16.4% 100.0%

 Size of Reduction

 Less than 5% 60,600 5.3% 32.4%

 5% < 10% 21,600 1.9% 11.6%

10% < 15% 20,600 1.8% 11.0%

15% < 20% 23,600 2.1% 12.6%

20% < 25% 20,000 1.7% 10.7%

25% < 50% 30,700 2.7% 16.4%

 50% or More 9,900 0.9% 5.3%

A substantial majority of vested participants in the plans studied received their full benefit from PBGC. 

Of the 16 percent of participants whose benefits were reduced due to the limitations on the guarantee 

almost one-third had a reduction of less than 5 percent and 44 percent had their benefits reduced by less 
PBGC’s Single-Employer Guarantee Outcomes

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than 10 percent. Two-thirds of those participants affected had benefit reductions of less than 20 percent.

Less than 1 percent of participants lost more than half their benefits; those cases are typically due to 

benefits being subject to the Maximum Insurance Limitation. These participants represent a little more 

than 5 percent of participants with a reduced benefit. They are primarily in two industries. The airline 

industry accounted for 56 percent and the steel industry accounted for 27 percent of participants with

reductions of greater than 50 percent.

Figure 1 shows the weight of each primary limitation on each “Size of Reduction” group above. For 

example, in the group where the Size of Reduction is between 5 percent and 10 percent, 28 percent of 

the reduction in participant’s benefits is due to the AAN Limitation, 36 percent to the Phase-In 

Limitation and 36 percent to the Max Limitation. For large reductions in benefits (reductions greater 

than 25 percent) more than 75 percent of the benefit reductions are due to the Max Limitation.

Figure 1 - Maximum Insurance Limitation Accounts for Most of Largest Benefit Reductions

Additional analysis of the impact of each of the primary benefit limitations begins on page 10. 

Trusteed Plans

Of the 500 plans included in the study, 59 percent had at least one participant whose benefit was reduced 

by one of the three primary limitation provisions. As seen in Table 5, the Maximum Insurance and 

Phase-In Limitations each reduced benefits of some participants in over one-third of the plans reviewed. 

The AAN Limitation reduced benefits of some participants in less than 20 percent of the 500 plans. In 

most plans where any benefits were reduced, however, the benefits of only a small percentage of 

participants were affected.

29% 28% 32% 25% 24%

10% 1%

55%

36% 28% 43%

38%

13% 4%

16%

36% 40%

32% 39%

77%

95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

 0-5% 5-10% 10-15% 15-20% 20-25% 25-50% 50%+

Percentage of Total Reductions

Total Benefit Reduction Percentage

Limitations by "Size of Reduction" Group

AAN Limitation Phase-In Limitation Max Limitation
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Table 5 - Plans Affected by Primary Benefit Limitations

Total 

Plans

At Least One

Limitation

AAN

Limitation

Max

Limitation

Phase-In 

Limitation

500 297 89 173 183

Figure 2 shows the number of participants affected by each limitation based on their status at the date of 

plan termination (DOPT). 

Figure 2 - Number of Participants Affected by Primary Limitation by Participant Status

In total, more retired participants are affected by primary limitations than are separated or active vested 

participants. However, this is due to the fact that plans are typically quite retiree heavy on plan termination

– retirees represent the largest of the three categories of participants (retirees, separated with a vested 

benefit and active participants). As shown earlier in Table 1, active participants have the highest 

likelihood of being affected by a benefit limitation. As shown in Table 2, active participants also have 

larger average benefit reductions than other participant categories.

Among retirees, the impact of the primary limitations varies. The AAN Limitation can only apply to 

retirees who were younger than the plan’s normal retirement age at the point where the guarantee limits 

were applied. The Max Limitation is adjusted for a participant’s age at plan termination (higher for 

older participants and lower for younger participants). In addition, because single-employer private 

sector defined benefit plans are rarely adjusted to increase benefits for older retirees in recent years, the 

Phase-In Limitation may be less likely to apply.

 -

 10,000

 20,000

 30,000

 40,000

 50,000

 60,000

 70,000

Retired Separated Vested Active

Number of Participants Reduced

Participant Status at Date of Plan Termination

Participants with Reduced Benefits by Status and Limitation 

AAN Limitation Phase-In Limitation Max Limitation
PBGC’s Single-Employer Guarantee Outcomes

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Analysis by Primary Limitation

Accrued-at-Normal Limitation

Table 6 shows the impact of the Accrued at Normal Limitation. This limitation reduced the 

supplemental benefits of 44,000 participants in the plans reviewed. Approximately 73 percent of those 

affected by the AAN Limitation were retirees. The total present value of benefits (PVB) for the affected 

participants before the application of the limitation was almost $10 billion, or about $222,000 per 

participant. The AAN Limitation reduced the present value of benefits for all affected participants by 

about $1.1 billion, an 11 percent reduction.

The AAN Limitation applies to benefits that are paid up to the plan’s normal retirement age. By 

expressing the value of the benefit reduction as a percentage of present value, we show the lifetime 

reduction in benefit value. The reduction in monthly benefits paid prior to normal retirement age is 

larger than the average lifetime reduction.

Table 6 - Impact of Accrued-at-Normal Limitation on Benefits of Affected Participants

Status

Number of 

Participants 

Affected by 

AAN

Limitation

PVB Before 

Applying 

AAN

Limitation*

PVB After 

Applying 

AAN

Limitation*

Percent of 

PreLimitation 

Value 

Received

PVB Lost 

Due to AAN

Limitation*

Average 

Loss of PVB

per Affected 

Participant

Retired 32,000 $8,661 $7,643 88% $1,018 $31,800

Separated 3,900 162 151 93% 11 2,800

Active 8,100 947 885 93% 62 7,700

All Participants 44,000 $9,770 $8,680 89% $1,091 $24,800

*Dollars in millions

The number of participants affected by the AAN Limitation is 44,000 out of 1,142,700 participants in 

this study. Four of the 500 plans in this study generated the majority of participants affected by the AAN 

Limitation. The following four plans contributed a total of 29,000 participants with benefits reduced by

the AAN Limitation:

• Retirement Plan for Certain Employees of US Airways, Inc.

• Delphi Retirement Program for Salaried Employees

• Delphi Hourly-Rate Employees’ Pension Plan

• Pension Plan of Bethlehem Steel Corporation

Maximum Insurance Limitation

Table 7 shows the impact of the Maximum Insurance Limitation. This limitation also affected the 

benefits of about 44,000 participants and resulted in substantial reductions in their present value of 

future benefits, with an average reduction of $131,800. The average present value of benefits for a 
PBGC’s Single-Employer Guarantee Outcomes

11

participant affected by the Max Limitation was nearly $444,000 before applying the limitation, double 

the present value of benefits for participants affected by the AAN Limitation and nearly four times the 

present value of benefits for participants impacted by the Phase-In Limitation.

The average benefit loss from the Max Limitation was much larger for active participants than for 

retired participants. In part, this reflects that the maximum benefit guarantee is actuarially adjusted for 

age at date of plan termination, making the guarantee amount smaller for those collecting benefits at 

younger ages. For 2019, the annual maximum benefit guarantees, payable as a straight-life annuity, are 

$43,742 for a 60 year old, $67,295 for a 65 year old, and $111,710 for a 70 year old.11F

12 If an unmarried

participant of each age were entitled to a benefit of $100,000 per year under their plan, the Max 

Limitation would reduce the benefit of the 60 year old by $56,258 per year and that of the 65 year old by 

$32,705 per year, but would not reduce the benefit of the 70 year old. 

A second reason retired participants had a lower average benefit reduction is that retirees are more likely 

to receive benefits greater than guaranteed benefits due to PBGC’s allocation of assets in the plan and 

the allocation of recovery amounts. By law, plan assets are used to cover the benefits of those who were 

eligible to retire at least three years prior to the date the plan terminated before they are used to cover the 

benefits of other participants. In many plans that PBGC trustees, plan assets are sufficient to cover all 

benefits earned by most retirees, even if their benefits exceed the guarantee level for their age. These 

two reasons explain why the benefits of retirees affected by the Max Limitation were reduced by only 22

percent while the benefits of affected active participants were reduced by 37 percent.

Table 7 - Impact of Maximum Insurance Limitation on Benefits of Affected Participants

Status

Number of 

Participants 

Affected by 

Max 

Limitation

PVB Before 

Applying 

Max 

Limitation*

PVB After 

Applying 

Max 

Limitation*

Percent of 

PreLimitation 

Value 

Received

PVB Lost 

Due to 

Max 

Limitation*

Average 

Loss of 

PVB per 

Affected 

Participant

Retired 20,800 $9,008 $7,023 78% $1,985 $95,400

 Separated 1,300 276 204 74% 72 55,400

Active 21,900 10,214 6,470 63% 3,744 171,000

All Participants 44,000 $19,498 $13,697 70% $5,801 $131,800

*Dollars in millions

Phase-In Limitation

Table 8 shows the impact of the Phase-In Limitation. 10 percent of all participants in the study lost some 

or all of the benefit increases their plans had provided within five years of the date their plan terminated. 

This limitation reduced the benefits of 118,000 participants. 

 

12 See https://www.pbgc.gov/news/press/releases/pr18-06
PBGC’s Single-Employer Guarantee Outcomes

12

Table 8 - Impact of Phase-In Limitation on Benefits of Affected Participants

Status

Number of 

Participants 

Affected by 

Phase-In 

Limitation

PVB Before 

Applying 

Phase-In 

Limitation*

PVB After 

Applying 

Phase-In 

Limitation*

Percent of 

PreLimitation 

Benefit 

Received

PVB Lost 

Due to 

Phase-In 

Limitation*

Average 

Loss of PVB 

per Affected 

Participant

Retired 58,600 $8,310 $7,393 89% $917 $15,600

 Separated 10,500 433 366 84% 67 6,400

Active 49,300 4,769 4,175 88% 594 12,000

All Participants 118,400 $13,512 $11,934 88% $1,578 $13,300

*Dollars in millions

The Phase-In Limitation impacts the benefits of a far greater number of participants than the AAN and 

Max Limitations because the benefit of any participant, regardless of benefit level or additional 

supplement, may be impacted if their plan increased benefits in the period leading up to plan 

termination. Participants with benefits affected by the Phase-In Limitation had the lowest average 

present value of future benefits ($114,000) of the three limitation groups. For those affected, the PhaseIn Limitation reduced the present value of benefits by an average $13,300, or 12 percent. The largest 

number of participants with benefits affected by the Phase-In Limitation had their present value of future 

benefits reduced by less than 5 percent. Only 12,000 of the affected participants had their benefits 

reduced by another limitation. 

More Than One Limitation

About 16,500 participants had benefits reduced by two or all three of the primary limitation provisions. 

This is less than 2 percent of all 1,142,700 participants in the study but 9 percent of the 187,000 

participants with a benefit reduced by at least one of the limitation provisions. 

Over 90 percent of participants affected by PBGC limitations in this study were only affected by one 

primary limitation. Most of the participants with benefits reduced by multiple PBGC primary limitations 

were in steel plans. 

Trends Over Time

The PBGC single-employer guarantee amounts are indexed and grow as national average wages grow. 

One question is whether the adjustment makes the guarantee more or less generous over time, compared 

with the level of plan promises. Figure 3 shows the percentage of participants affected by benefit 

reductions (red) and the average benefit reduction percentage (blue) by year of plan termination. The 

dotted lines show the average results from the study for all participants. Other than the impacts of 

specific plans terminating in certain years, there does not appear to be a clear significant historical trend

in the results.
PBGC’s Single-Employer Guarantee Outcomes

13

Figure 3 – Guarantee Outcome Trends over Time

There are several large spikes in the graph associated with specific events. A large increase in the 

percentage of participants with reduced benefits is seen in 1991, due to the termination of the Pan 

American World Airways plans. Increases in the average reductions in 2003 and 2006 were due to the 

Retirement Income Plan for Pilots of U.S. Airways, Inc. and the Delta Pilots Retirement Plan, 

respectively. 

Across all plans studied, ten plans accounted for 89 percent of the value of benefit losses among 

participants, as shown in Figure 4. However, these plans represented less than 30 percent of the 

participants in the study. Table 9 displays the number of participants affected by a limitation and the 

average value of benefit reductions for those affected for these plans.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012

Year of Plan Termination

Percent of Participants Affected and Average Benefit Reduction Percentage,

by Year of Plan Termination

Percent of Participants Affected Average Benefit Reduction Percentage

Average Across Period - Participants Affected Average Across Period - Percent Reduction
PBGC’s Single-Employer Guarantee Outcomes

14

Figure 4 – Ten Plans Account for Most of the Reductions in Benefit Value

Table 9 – Value of Benefit Losses for Ten Plans Which Account for Most Reductions in Value

Plan

Total 

Participants

Participants 

Affected by a 

Primary 

Limitation

Average Loss of 

Benefit Value per 

Affected 

Participant

Retirement Income Plan for Pilots of U.S. Airways, Inc. (2003) 5,800 5,200 53%

United Airline Pilots Defined Benefit Pension Plan (2004) 14,100 9,800 26%

Delta Pilots Retirement Plan (2006) 13,000 7,600 30%

Pension Plan of Bethlehem Steel Corporation (2002) 91,100 17,200 22%

Delphi Hourly-Rate Employees Pension Plan (2009) 43,000 14,500 16%

United Airlines Ground Employees' Retirement Plan (2005) 35,800 25,500 20%

LTV Steel Hourly Pension Plan (2002) 61,300 35,500 21%

Delphi Retirement Program for Salaried Employees (2009) 19,800 5,700 19%

Weirton Steel Corp. Ret. Plan (2003) 9,200 3,300 20%

National Steel Corp Hourly Pen Plan (2002) 9,600 3,900 20%

All Other Plans 840,000 58,800 14%

Total 1,142,700 187,000 

Results by Industry

The data demonstrate significant differences by industry in the impact of the limitations on the 

guarantee. Table 10 shows the number of participants impacted by at least one of the primary benefit 

limitations by industry. Participants in plans from the airline, steel, and motor vehicle equipment 

industries were much more likely to have their benefits reduced by at least one of the three guarantee 

limitations – 27 percent had their benefits reduced – than were participants from other industries, where 

only 3 percent experienced benefit reductions. 

20%

13%

13%

9%

8%

8%

8%

6%

2%2%

11%

Percent of Total Reductions Across All Studied Plans 

Retirement Income Plan for Pilots of U.S. Airways,

Inc. (2003)

United Airline Pilots Defined Benefit Pension Plan

(2004)

Delta Pilots Retirement Plan (2006)

Pension Plan of Bethlehem Steel Corporation (2002)

Delphi Hourly-Rate Employees Pension Plan (2009)

United Airlines Ground Employees' Retirement Plan

(2005)

LTV Steel Hourly Pension Plan (2002)

Delphi Retirement Program for Salaried Employees

(2009)

Weirton Steel Corp. Ret. Plan (2003)

National Steel Corp Hourly Pen Plan (2002)

All Other Plans
PBGC’s Single-Employer Guarantee Outcomes

15

Table 10 - Participants with Benefits Reduced by One or More Primary Benefit Limitation, 

by Industry and Limitation

Industry

Number of: Percent of Participants Affected By:

Plans Participants

At Least One 

Limitation

AAN

Limitation

Max

Limitation

Phase-In 

Limitation

Airline 21 243,200 29% 3% 10% 16%

Financial 16 37,200 1 0 0 0

Healthcare 37 40,200 5 0 1 5

Motor Vehicle Equipment 25 101,300 23 16 4 6

Other12F

13 63 68,800 4 1 1 3

Other Manufacturing 174 267,900 3 0 0 3

Retail 28 83,300 1 0 0 1

Steel 136 300,800 26 6 5 20

All Industries 500 1,142,700 16% 4% 4% 10%

The three limitations impacted different industries in different ways. In terms of present value of future 

benefits lost, the Maximum Insurance Limitation caused the largest reduction in benefits in the airline, 

steel, and motor vehicle equipment industries. However, when it came to the number of participants 

whose benefits were reduced by each limitation, the numbers tell a different story. While the benefits of 

participants in failed airline industry plans were reduced the most by the Maximum Insurance

Limitation, the Phase-In Limitation affected a larger number of participants in that industry. Also, 

participants in the airline industry were generally only impacted by a single limitation, either the 

Maximum Insurance Limitation or the Phase-In Limitation, while participants in the motor vehicle 

equipment and steel industries were more likely to be affected by multiple limitations.13F

14

The Accrued-at-Normal Limitation affected participants in the motor vehicle equipment industry more 

than other industries, with 16 percent of motor vehicle equipment industry participants experiencing a 

reduction, compared to 6 percent in the steel industry and 3 percent in the airline industry. This appears 

to reflect the demographics of the largest motor vehicle equipment industry plans, which were the result 

of a spin-off and thus reflected a relatively recent retiree population, and may also reflect a pattern where 

the ratio of supplemental benefits to the accrued benefit at normal retirement age is higher than the pattern 

seen in other industries.

 

13 Other includes food and beverage industries, newspapers and other services. 14 When the sum of the percent of participants affected by each primary limitation is greater than the percent of participants 

affected by at least one limitation, this indicates that a number of participants were affected by multiple limitations. For 

example, the steel industry shows 6 percent affected by AAN Limitation, 5 percent by the Max Limitation and 20 percent by 

the Phase-In Limitation. The sum of these percentages is 31 percent, which compared against the 26 percent affected by at 

least one Limitation indicates that a number of participants in the steel industry were affected by more than one Primary 

Limitation.
PBGC’s Single-Employer Guarantee Outcomes

16

The steel industry found the largest number of participants impacted by the Phase-In Limitation, with 20 

percent (60,000 participants) experiencing reductions, closely followed by the airline industry at 16 

percent (40,000 participants). The increase in percentage of participants with benefits affected by the 

Phase-In Limitation in the steel industry, from 15 percent in the 2008 study to 20 percent in the current 

study, is largely due to the inclusion of the Pension Plan of Bethlehem Steel in the current study. Table 11

provides a closer look at exactly how the affected participants’ benefits were reduced.

Table 11 - Average Benefit Reduction for Participants Whose Benefits Were Reduced by One or More 

Primary Benefit Limitation, by Industry and Limitation

Industry

Number of 

Participants

Percent 

with

Reduced 

Benefits

Average Percent Reduction From:

All

Limitations

AAN

Limitation

Max

Limitation

Phase-In

Limitation

Airline 243,200 29% 28% 3% 34% 13%

Financial 37,200 1 19 0 20 8

Healthcare 40,200 5 8 0 12 5

Motor Vehicle Equipment 101,300 23 17 14 20 3

Other 68,800 4 18 10 20 14

Other Manufacturing 267,900 3 11 9 19 6

Retail 83,300 1 15 0 21 8

Steel 300,800 26 21 8 25 12

All Industries 1,142,700 16% 23% 11% 30% 12%

Across all industries, the Maximum Insurance Limitation was responsible for the largest percentage 

reduction in benefit values, reducing the value of benefits by an average of 30 percent, when it applied.

In the airline industry it reduced benefits by an average of 34 percent, when it applied.

Figure 5 displays the distributions of benefit reductions across industries. The airline, steel, and motor 

vehicle equipment industries account for most of the value of benefit reductions in the study.
PBGC’s Single-Employer Guarantee Outcomes

17

Figure 5 - Benefit Reductions Are Primarily in Three Industries

The relative magnitude of the primary benefit limitations for each industry is displayed in Figure 6.

Figure 6 - Relative Importance of Primary Benefit Limitations Varies Across Industry

The airline industry was the most impacted by benefit limitations, and the value of benefit reductions in 

that industry was primarily due to the Maximum Insurance Limitation. 48 percent of all benefit 

reductions in the study were attributable to the impact of the Maximum Insurance Limitation on airline 

industry plans. The remaining reductions in the airline industry resulted from the Phase-In Limitation, 

accounting for about 9 percent of all reductions in this study. 

Airline

57%

Financial

0%

Healthcare

0%

Motor Vehicle 

Equipment

14%

Other

1%

Other 

Manufacturing

1%

Retail

0%

Steel

27%

Distribution of Reduction Amounts by Industry

0%

20%

40%

60%

80%

100%

Benefit Reductions Due to Each Primary 

Limitation by Industry

AAN Reduction Phase-In Reduction Max Limitation
PBGC’s Single-Employer Guarantee Outcomes

18

Meanwhile, the steel industry accounted for 27 percent of all reductions in the study; 15 percent due to 

the Maximum Insurance Limitation, 9 percent due to the Phase-In Limitation, and 3 percent due to the 

Accrued-at-Normal Limitation. Lastly, the motor vehicle equipment industry accounted for 14 percent of 

all reductions in this study; 9 percent due to the Accrued-at-Normal Limitation, 5 percent due to the 

Maximum Insurance Limitation, and a small amount due to the Phase-In Limitation. 

Table 12 shows the number of participants whose benefits were reduced by one or more of the limitation 

provisions, by both industry and participant status at plan termination.
PBGC’s Single-Employer Guarantee Outcomes

19

Table 12 - Number of Participants with Benefits Reduced by One or More Primary Benefit Limitation, 

by Industry, Participant Status and Limitation

Industry Participant

Status

Number of 

Participants

Number with Benefits Reduced By:

At Least One 

Limitation

AAN

Limitation

Max

Limitation

Phase-In 

Limitation

Airline All Participants 243,200 69,600 7,600 23,800 39,900

Retired 72,400 19,100 500 9,100 10,300

Separated 52,700 5,500 2,400 500 2,600

Active 118,100 45,000 4,700 14,200 27,000

Financial All Participants 37,200 200 0 100 100

Retired 8,500 0 0 0 0

Separated 24,000 200 0 100 100

Active 4,700 0 0 0 0

Healthcare All Participants 40,200 2,200 0 200 2,000

Retired 7,900 100 0 0 100

Separated 16,100 300 0 0 300

Active 16,200 1,800 0 200 1,600

Motor Vehicle 

Equipment All Participants 101,300 23,700 16,600 3,800 5,600

Retired 48,700 18,800 15,500 2,600 2,600

Separated 30,300 1,100 100 0 1,000

Active 22,300 3,800 1,000 1,200 2,000

Other All Participants 68,800 3,100 600 500 1,900

Retired 22,800 1,200 600 300 300

Separated 37,700 1,100 0 100 900

Active 8,300 800 0 100 700

Other 

Manufacturing All Participants 267,900 9,000 1,300 700 7,800

Retired 117,000 3,500 1,200 300 2,800

Separated 119,600 2,000 100 300 1,600

Active 31,300 3,500 0 100 3,400

Retail All Participants 83,300 1,100 0 0 1,100

Retired 18,400 100 0 0 100

Separated 57,700 700 0 0 700

Active 7,200 300 0 0 300

Steel All Participants 300,800 78,300 17,900 14,700 59,900

Retired 197,800 53,300 14,200 8,500 42,400

Separated 57,600 4,600 1,300 100 3,300

Active 45,400 20,400 2,400 6,100 14,200

All Industries All Participants 1,142,700 187,000 44,000 44,000 118,400

Retired 493,400 96,000 32,000 20,800 58,600

Separated 395,900 15,500 3,900 1,300 10,500

Active 253,400 75,500 8,100 21,900 49,300
PBGC’s Single-Employer Guarantee Outcomes

20

This table shows that the Accrued-at-Normal Limitation was most prevalent in the steel and motor 

vehicle equipment industries. Combined, they accounted for 78 percent of all participants with benefits 

reduced by the Accrued-at-Normal Limitation. 

More than half of all participants with benefits reduced by the Max Limitation were in the airline industry. 

Almost 88 percent of participants with benefits exceeding the maximum insurance limit were from either 

the airline or steel industries.

The airline and steel industries were also highly affected by the Phase-In Limitation. 84 percent of 

participants with phase-in reductions were in one of these two industries. More retirees in steel plans 

were affected by the Phase-In Limitation; however, active participants were 10 percent more likely to 

experience a reduction due to the Phase-In Limitation. In some collectively bargained plans, the PhaseIn Limitation affects the benefits of both active participants and retirees because benefit increases apply 

to both active workers and retirees. 
PBGC’s Single-Employer Guarantee Outcomes

21

METHODOLOGY

Data Sources

The study is based on a review of PBGC’s internal case files for each plan. When a plan is terminated 

and transferred to PBGC, payments to retirees continue while PBGC takes over the participant records 

and assets of the plan. PBGC then begins a process to audit the records and assets and value each 

participant’s benefit so as to determine the guarantee amount. Since sponsors of plans that come to 

PBGC have often been in business hardship for an extended period of time, records may be lacking or in 

disarray. Thus, the process of determining the final amount of guarantees for each participant may take 

2 to 4 years or longer.

This study relied on the data prepared to determine final guarantee amounts for each plan, in particular 

the following PBGC data sources maintained within the files of PBGC’s Office of Benefit 

Administration (OBA):

 Case Memo. This documents the overall results for the plan, including the “closeout” actuarial 

valuation numbers and summary details about the plan and its termination. Attachments and 

appendices to the case memo were also utilized

 Case Database. A final database is created as each plan or “case” is finalized by PBGC. For each 

plan participant, the database includes numerous data elements related to the determination of the 

individual’s benefit. 

 V1 Calculation Spreadsheet. For each case the associated V1 spreadsheet documents the 

formulas used to calculate each field in the case database, including the calculation of the present 

value of future benefits.

Since it is based on PBGC case files, the study is limited to participant outcomes under the guarantee 

program. It does not consider the effects of any arrangements with other parties that may make up losses 

for certain participants such as follow-on plans or arrangements where a prior employer provides benefits 

that supplement guarantees.

Selection of Plans

The 500 plans studied are not a random sample of PBGC trusteed plans but are instead selected to focus 

on the largest plans for which data was readily available, while also including a range of industries 

comparable to the range of industries whose plans have terminated and become trusteed by PBGC. To 

provide a basis for comparison with the prior (2008) study, almost all of those plans were also included. 

Participants in the plans represent more than half of the participants in plans PBGC has trusteed.14F

15

Thus, the plans in the study include:

• 115 of the 125 plans included in the prior 2008 study

• 375 plans from the remaining PBGC universe of trusteed plans chosen through a combination of:

o Selecting plans in order from largest to smallest based on Termination Liability, and

 

15 See Table S-19 of PBGC’s 2016 Pension Insurance Data Tables.
PBGC’s Single-Employer Guarantee Outcomes

22

o Selecting additional plans to more closely match the industry representation of PBGC’s 

trusteed plan population.

The study required access to case files and individual databases on each plan. During PBGC’s history, 

software and storage formats have evolved requiring conversion of historical data for purposes of the 

study. To minimize technical conversion issues, while still gathering data on the majority of participants 

from PBGC’s history, only plans with Date of Plan Termination (DOPT) between 1988 and 2012 are 

included. PBGC’s case processing typically takes two to four years or longer for the case to be finalized 

and archived, limiting the universe of plans studied to plans that terminated through 2012. The study 

period is seven years longer than the prior study which included plans with DOPTs through 2005. 

The following table compares the number of plans and participants in all PBGC trusteed plans to the

study population, distributed by industry.15F

16

Table 13 - PBGC Trusteed Plans and Vested Participants Compared with Plans Included in Study

Trusteed by PBGC (1975-2016): Included in Study:

 Plans Vested Participants Plans Vested Participants

Industry Number Percent 

of Total Number Percent of Total Number Percent of Total Number Percent of Total

Agriculture, Mining,

and Construction 272 5.7% 46,885 2.1% 13 2.6% 9,520 0.8%

Manufacturing 2,820 59.1% 1,339,296 58.9% 345 69.0% 638,853 55.9%

Transportation and 

Public Utilities 209 4.4% 379,331 16.7% 30 6.0% 295,567 25.9%

Information 71 1.5% 21,124 0.9% 7 1.4% 5,104 0.4%

Wholesale Trade 297 6.2% 44,407 2.0% 10 2.0% 20,652 1.8%

Retail Trade 342 7.2% 175,099 7.7% 28 5.6% 83,263 7.3%

Finance, Insurance,

and Real Estate

158 3.3% 84,758 3.7% 17 3.4% 37,242 3.3%

Services & 

Non-Profits

600 12.6% 182,584 8.0% 50 10.0% 52,538 4.6%

Total 4,769 100% 2,273,484 100% 500 100% 1,142,739 100%

Use of Present Values

The measurement of benefit reductions is performed based on the present value of future benefits, as 

measured and archived in plan case files, rather than on the benefit amount itself. This approach 

simplifies the comparisons for participants with benefit amounts that change over time, by determining a 

single reduction percentage in estimated lifetime value of benefit payments for each individual. This is 

 

16 Data from PBGC’s 2016 Pension Insurance Data Tables (Table S-19), which utilizes broader industry groupings than 

shown elsewhere in this report.
PBGC’s Single-Employer Guarantee Outcomes

23

most important when the AAN Limitation applies to a participant, resulting in reduction of the amount 

of a temporary supplement that only applies until a later age is attained.

Relevant present value information for each participant was obtained from the Case Database, where it 

was determined as of the plan’s DOPT. For participants who were retired as of the DOPT, the present 

values shown in the case files would reflect their status at DOPT. For all other participants, present 

values would have been determined assuming benefit commencement at their Expected Retirement Age

(XRA). Interest factors and mortality assumptions reflect the applicable Section 4044 assumptions at 

DOPT. 

About one-third of participants who had not yet retired as of their plan’s DOPT have since retired. 

Analysis of these individuals concluded that re-determining present values as of their actual 

commencement date (rather than as of their assumed XRA) would have had minimal impact on the 

outcome. 

Determining the impact of the limitation provisions on vested participant benefits required the 

identification of the present value of the reduction in benefit payments caused by each limitation for 

each participant in each case. Using the Case Database fields, the estimated present value of the plan 

benefits the participants would have received over their lifetimes without any reductions was compared 

to the present value of their lifetime benefits after OBA applied each individual limitation. From the 

difference in these calculations, the number and percentage of participants whose benefits were reduced 

by each limitation and the average percentage reduction in benefits was determined. 

The average percentage reductions shown in the current study were calculated on an aggregate basis, 

dividing the total present value of benefit reductions by the total present value of benefits participants 

would have received if their benefits had not been reduced. This methodology produces a “liabilityweighted” average benefit reduction. If we instead reported the average reduction in benefits for the 

average participant (a “participant-weighted” average) the average reduction would have been lower –

17 percent instead of the 23 percent calculated for the primary benefit reductions.

Changes in Methodology from Prior (2008) Study

The 2008 study also found 84 percent of vested participants received their full benefits. However, the 

2008 study applied a somewhat narrower methodology than the current study, looking only at the three 

most important limitations, only including benefit losses in excess of 0.5 percent, and finding somewhat 

higher benefit losses (28 versus 24 percent in the current study) for participants whose benefits were 

reduced and a larger likelihood that at least one participant in a plan was affected by one of the primary 

limitations (over 80 percent in the prior study versus less than 60 percent in the current study). 

Specific changes to the methodology used to calculate the reduction percentages from our prior (2008) 

study include:

 The 2008 study rounded the reduction percentage of each participant to the nearest percent. In effect, 

the rounding treated participants with a benefit reduction of less than 0.5 percent as not experiencing 

a benefit loss. The current study uses minimal rounding, typically to $1 for most plans. 
PBGC’s Single-Employer Guarantee Outcomes

24

 Beneficiary records were excluded in the 2008 study. The current study includes both in-pay and 

deferred beneficiaries. (Neither study, however, included participants who were not vested as of 

DOPT, nor records of alternate payees under a QDRO with separate records in the database.) 

115 of the 125 plans in the 2008 study were also included in the 500 plans in the current study. (The 

detailed data needed to include the additional 10 plans in the current study was no longer available in 

one of the formats readily accessible to the study team.) 

To evaluate the impact of differences in methodology, we evaluated the 115 plans included in both the 

2008 and the current study under both methodologies. The percentage of participants affected by a 

benefit reduction went up by 1 percent due to the change in the rounding methodology.

Summary Information for Plans and Participants Studied

In total this study covered 500 plans with 1,142,700 vested participants as of the date the plans

terminated. Plans studied terminated between 1988 and the end of 2012. 115 of those plans, covering 

468,500 vested participants were also included in the 2008 study.

Figure 7 below depicts the number of participants included in this study by the year in which the plan 

terminated. Plans terminating in 2002, 2005, and 2009 accounted for 56 percent of all participants 

included in this study.

Figure 7 - Participants Included in Study by Year

Figure 8 displays the number of plans included in the study by year of termination. 

0

50

100

150

200

250

300

1988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012

Participant Count (Thousands)

Year of DOPT

Participant Count Studied by Year of DOPT

Retirees Separated Vesteds Actives
PBGC’s Single-Employer Guarantee Outcomes

25

Figure 8 - Plans Included in Study by Year

0

10

20

30

40

50

60

70

1988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012

Number of Cases

Year of DOPT

Number of Plans Studied by Year of DOPT
PBGC’s Single-Employer Guarantee Outcomes

26

CONCLUSIONS

This study finds that, when a plan fails, 84 percent of vested participants covered by PBGC’s singleemployer guarantee program receive all the benefits they had accrued under their plans. However, 

among the group of participants who did not receive their full benefit, the aggregate loss in benefit value 

was 24 percent. The study conclusions are based on a review of historical records for over half of the 

participants whose plans have been trusteed by PBGC under the single-employer guarantee program.

Looking at the broader universe of plans that terminate, most plans are well enough funded to be able to 

provide annuities that will cover all accrued benefits. It is only in the minority of plans which fail 

where, on average, 16 percent of participants lose a portion of their benefit. To the extent a failing plan 

is relatively better funded, the number of participants losing a portion of their benefits and the amount of 

loss is reduced.

For the 16 percent of vested participants with a benefit reduction, these reductions were largely due to 

three primary benefit limitations: the Accrued-at-Normal Limitation; the Maximum Insurance 

Limitation; and the Phase-in Limitation. In combination, these three primary benefit limitations 

generated 23 percent of the 24 percent average benefit value loss. 

The Maximum Insurance Limitation continued to be the limitation that caused the largest losses in 

benefit value for participants affected by a benefit limitation. This limitation applies to individuals with 

the largest benefits or those who retired early and were still relatively young when the plan was 

terminated. Participants who lost more than one-quarter of their benefit value represented less than 4 

percent of all vested participants; over three-quarters of the reduced benefit value they experienced was 

due to the Maximum Insurance Limitation. For participants whose benefit value was reduced by more 

than half (under 1 percent of participants), 95 percent of the loss was due to the Maximum Insurance 

Limitation.

The PBGC limitation that affects the most participants is the Phase-In Limitation. More than 10 percent 

of vested participants had their benefits reduced due to the Phase-In Limitation.

Whether a participant’s benefit is reduced depends heavily on the characteristics of the plan and 

individual participants. Many plans did not provide a supplemental benefit or increase benefits through 

plan amendments. Only those plans that did had participants whose benefit was reduced by the Accruedat-Normal or Phase-In Limitation. 

The study reviewed plan terminations over the period 1988 through 2012. During that period there was 

no obvious trend in the outcomes for participants under the guarantee limitations. It will be important to 

monitor the program in the future as changes in plan provisions and to the insurance program evolve.