2026 Social Security, PBGC, projected covered compensation figures 

November 11, 2025

Social Security benefits payable will increase by 2.8% in 2026, the Social Security Administration (SSA) announced on Oct. 24 in updates that include the 2026 taxable wage base and the 2024 national average wage. The Pension Benefit Guaranty Corp. (PBGC) released its inflation-indexed 2026 premium amounts, maximum guaranteed benefit for single-employer pension plans and present value of the maximum guarantee. IRS has not yet issued 2026 covered compensation amounts, but Mercer has projected those figures using the published taxable wage base.

On Oct. 27, PBGC announced inflation-adjusted 2026 premium rates and the variable-rate premium cap.  With the exception of the variable rate premium, all premium amounts — including the per-participant variable-rate premium cap — are indexed annually for wage inflation.

On Oct. 30, PBGC announced that the maximum guaranteed benefit at age 65 for terminating plans will rise to $93,477 in 2026 from $89,181 in 2025. This amount is determined using the Social Security “old law” contribution and benefit base (see Social Security and SSI amounts). The maximum guaranteed benefit is adjusted if benefit payments start before (or after) age 65 or are paid in a form other than a single-life annuity. Some of the guaranteed amount may be paid from the plan’s assets, and participants may receive more if the plan is better funded or if PBGC can recover other amounts from the plan sponsor.

On Nov. 10, PBGC published the 2026 present value of the maximum guarantee table. These values are used to administer Internal Revenue Code (IRC) Section 436 restrictions on lump sums and other accelerated payments from underfunded plans. Plans at least 60% but less than 80% funded may only pay lump sums (or other accelerated distributions) up to the lesser of (i) 50% of the present value of the benefit otherwise payable or (ii) the present value of the participant's PBGC maximum guarantee. Plans subject to the restrictions must use the 2026 table for annuity starting dates in 2026, regardless of the plan year.

The present values will fall from 2025 levels at younger ages but will increase at ages 62 and older. The higher age-65 maximum guaranteed benefit and the update in the Section 417(e) mortality table raised the present values by roughly 5% across the board. Offsetting this increase, the change in interest rates (August 2025 IRC Section 417(e) lump sum segment rates of 4.20%, 5.29% and 6.08% vs. the August 2024 rates of 4.50%, 4.96% and 5.40%) reduced present values significantly at younger ages (where the impact of the first segment rate was less) and to a much lesser extent at older ages.

The next table shows the present values for 2026 and 2025. Tables of present values dating back to 2008 are available on the PBGC website, along with downloadable Excel tables.

* Present value determined using August 2025 lump sum segment rates of 4.20%, 5.29% and 6.08%.

† Present value determined using August 2024 lump sum segment rates of 4.50%, 4.96% and 5.40%.

Qualified defined benefit (DB) pension plans use covered compensation to determine “permitted disparity” under Section 401(l) design-based safe harbor rules and “imputed disparity” under Section 401(a)(4) general nondiscrimination testing rules. Covered compensation is the average Old-Age, Survivors and Disability Insurance (OASDI) contribution and benefit base for the 35 years ending with the year the employee reaches Social Security retirement age. Qualified plans have the option to determine permitted or imputed disparity using either actual or rounded covered compensation.

IRS has not yet issued 2026 covered compensation tables, but Mercer has projected these amounts based on the increase in the taxable wage base to $184,500 for 2026 from $176,100 for 2025. The table below shows covered compensation amounts for individuals who have already reached Social Security full retirement age. (At that age, covered compensation becomes fixed and is no longer affected by annual changes in the OASDI contribution and benefit base.)

The next table shows Mercer’s projected 2026 amounts for individuals below Social Security full retirement age.

• Present value of PBGC maximum guarantee (PBGC, Nov. 10, 2025)
• Maximum guaranteed benefit tables (PBGC, Oct. 30, 2025)
• Premium rates for 2026 and earlier years (PBGC, Oct. 27, 2025)
• Press release on Social Security COLA for 2026 (SSA, Oct. 24, 2025)
• Automatic determinations (SSA)

• Quick benefit facts and COLA resources for benefit plans (2021–2025)

 

Download the print-friendly PDF to read the full GRIST.