It depends.
crypt() uses 8 chars if I'm not mistaken. I use md5 encryption, which does not have a 8 char limit.
#----------------------------------------------------------------------------#
# Number of significant characters in the password for crypt().
# Default is 8, don't change unless your crypt() is better.
# Ignored if the "md5" or "blowfish" option is given to the
# pam_pwcheck module.
PASS_MAX_LEN 20
Hope this will help