The federal agency that protects private sector pension plans announced Monday that the maximum annual benefit for plans taken over in 2005 will be $45,614 for workers who wait until age 65 to retire.

The Pension Benefit Guaranty Corp. (search) said that figure represents an increase of 2.8 percent from the 2004 maximum annual benefit of $44,386. It was the largest one-year increase in the maximum for workers retiring at age 65 since a 5.5 percent jump in 2002.

The benefit figure is arrived at each year based on a formula set in law that takes into account such factors as growth in the benefit base. Workers who retire earlier than age 65 get smaller benefits and those who work longer get larger benefits.

If a pension plan is taken over by the PBGC in 2005 but a participant does not begin collecting benefits until a future year, the 2005 maximum insurance limits still apply.

More than 90 percent of the participants in pension plans (search) taken over by the PBGC face no reduction in benefits due to the legal limits set on coverage, according to an analysis done by the agency.

The maximum annual pension of $45,614 for someone retiring at age 65 represents a maximum monthly payment of $3,801, the agency said.

The PBGC, which insures the pensions of 44.4 million workers, announced last month that its deficit had doubled in 2004 to a record $23.3 billion as more ailing companies dumped their pension liabilities onto the agency.

The PBGC was created in 1974 as a government insurance program for traditional "defined benefit" pension plans. Employers pay insurance premiums to the agency and if an employer can no longer support its pension plan, the agency takes over the assets and liabilities and pays promised benefits up to limits set in law.