With concerns on the rise for the future of the Social Security system, employees are increasingly interested in making sure their pension and retirement benefits will be there when they need them. Those who have had pension programs from their employers may have questions or face problems when it comes time to begin receiving benefits.
Pensions come in a variety of shapes and sizes. Private employers generally aren't required to offer any retirement or pensions benefits at all; employers that choose to offer these plans have a lot of leeway in determining the type of plan, whether the employee will contribute to the plan, and rules for taking money out, for example. That said, a federal law called the Employee Retirement Income Security Act of 1974 (ERISA) puts some restrictions on how pension plans are administered and protects the rights of pension plan participants.
Common Pension Issues
There are a number of pension questions that often come up when plan participants want to start drawing their benefits:
- Inability to locate a former employer who provided a pension plan. This might happen because a beneficiary failed to notify the plan administrator of a change in address, the company changed its name, or the company moved or merged with another company, for example. In this situation, there are some steps you can take. Contact your former coworkers to find out whether they have information about the company. Do online research to find the company's new name or business address. Access your former employer's Department of Labor Form 5500, an informational form that must be filed by all pension plans, at www.freeerisa.benefitspro.com. Companies that have gone out of business, been acquired by another company, or merged may be found on the Lexis/Nexis legal online database.
- Plan termination. In this situation, the administrator may have tried to find all employees. If the administrator was unable to do so, it may have deposited a lump sum with an unclaimed property agency. If the plan terminated due to underfunding, the Pension Benefit Guaranty Corporation may be obligated to pay the benefits. The federal Employee Benefits Services Administration (EBSA) can assist employees who are entitled to benefits from plans that have terminated; the EBSA can be reached at 1-866-444-3272.
- Payments are lower than expected. Consult the plan administrator to verify its calculations, then compare those figures with the original plan documents. If there is a discrepancy or dispute, contact an independent actuary or an employment attorney for help.
- Pension plan denied your claim for benefits. The plan should have an appeal process to challenge a denial of benefits.
- Pension administrator says that you were overpaid and owe money to the plan. This can even occur years after the overpayment. If you are at fault for providing inaccurate information, you may have to repay the money. However, if plan staff made the mistake, they may be required to make restitution to the plan. Discuss the problem with the plan administrator; you may also want to consult with an employment lawyer.
- Benefits were divided in a divorce. This issue should have been addressed in the original settlement or decree. When benefits are due to be paid out, recipients should obtain a qualified domestic relations order (QDRO) to get their benefits.
How to Get Help
Many of us are counting on our pensions and retirement benefits to support us after we retire. Because pensions are so important, it makes sense to talk to an employment lawyer who specializes in benefits if you are facing problems getting your money.