PREMIUM SEARCH Search by job title, geography and build a list of executive contacts
Is your pension safe? If you postpone checking it out until you're ready to retire, you may be sorry. But there are things you can do now to make sure you get what's rightfully yours.
Some workers found out the hard way what can happen when workers don't know about rules protecting pension funds. Four employees of a California fencing company left their jobs and went on to other employment. The three supervisors and one laborer tried unsuccessfully to withdraw $17,000 they were entitled to from their 401(k) accounts at the small company they had left. Finally, they approached the Pension Rights Project in San Francisco for help.
When John Hotz, then head of the project, investigated, he found an uncooperative business owner and a pension plan administrator who didn't know even the most basic government rules for running the plan. It took nearly a year of phone calls, letter-writing, and cajoling, but finally the workers got their 401(k) money.
MAJOR STAKES.
In Lansing, Mich., a 62-year-old widow who sought help from the Pension Rights Project found out that she was entitled to more than $70,000 in past and future survivor benefits from her husband's pension. And in Minnesota, the pension project won a court case that could restore more than $20 million in health benefits to retirees of National Cash Register. The company is appealing the case.
Pension-counseling projects like these are available in 15 states, but workers and retirees in many other states could use help also. The existing pension projects can assist employees in both the private and public sectors, including employees of state and local governments and teachers. For a list of the states they cover, call the Pension Rights Center at (202) 296-3776.
The money at stake is far from small. According to the Pension Rights Center in Washington, D.C., where Hotz is in charge of providing technical assistance to the state projects, more than $20 million in pension benefits has been recovered by the projects -- usually for retirees and their families.
EMPLOYER VIOLATIONS.
Since the projects were created in 1992, they've been run on a shoestring -- $75,000 a year each in "discretionary" money that the U.S. Assistant Secretary on Aging has provided annually through a demonstration program of the Older Americans Act, plus whatever other funds and free help they can generate.
"The past 20 years, 16 laws have been enacted that require employers to amend their pension plans and then notify their workers of changes. It's not a simple task. It's understandable that workers and retirees are having trouble getting a grasp on how their pension works," explains Senator Chuck Grassley (R-Iowa). In illustrating some of the problems, Grassley cites an audit of the Pension Benefit Guaranty Corp., which takes over pension plans that terminate, suggesting that some people covered by those plans may be getting shortchanged by "as much as 15% to 20%" when they retire.
But the problems go beyond shortchanging retirees. Over the past five years, the Labor Dept. has undertaken some 25,000 cases against employers whose violations range from not depositing their contributions in 401(k) accounts to diverting employees' pension money into shaky investments or spending it to pay off company debts.
STEPS TO TAKE.
The complexity of the law and stories like the ones above explain why Grassley and Senator John Breaux (D-La.) have introduced a bill to make the counseling program permanent and expand the services to other states. The bill also proposes establishing a nationwide toll-free phone number that could guide people with pension problems to one of several federal agencies with jurisdiction or to a local pension project.
The lawmakers are trying to get Congress to include the bill as part of a renewal of the Older Americans Act, which has been approved by a House committee but hasn't been addressed yet in the Senate. Congressional sources say that they're trying to work out other issues not related to the pension projects and can't predict whether the legislation will be completed before Congress adjourns in October.
Regardless, private sector pension plans are required by federal rules to provide you with information and to manage your money prudently. If you work in the private sector, here are some steps you can take now and throughout your career to make sure that your plan is following the law:
If you have a 401(k) or similar plan, read every statement to make sure that both your own and the employer's contributions are actually included in the account.
To understand your plan's rules -- such as how long it takes to vest and your rights to withdraw the money -- read the summary plan document you should have received within 90 days of starting work. If you don't have a copy, request one in writing from your plan administrator, who is obligated to provide it.
Read the Labor Dept.'s publications -- especially Protect Your Pension -- about your pension rights. The publications can be found on the Internet at www.dol.gov/dol/pwba or by ordering free copies through the toll-free line, at (800) 998-7542.
If you have questions about how your employer is managing your pension plan and can't get them answered at work, request help from one of the pension counseling projects or the Labor Dept.'s technical-assistance office, at (202) 219-8776.
Why bother? The longer you wait, the harder it may be to straighten out or even avoid pension problems -- especially with employers from years earlier. By being vigilant now, you may be able to preserve not only your pension but also the precious time you've been looking forward to when you retire.
Hoffman is a contributor to Business Week and author of Bankroll Your Future: How to Get the Most from the Government for Your Retirement. Her column appears every other Thursday on BW Online. You can reach her for comments or story ideas at ellenshof@hotmail.com
Copyright 2000 , by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
