It’s estimated that 22% of Americans pay into a defined-benefit pension plan. If you’re one of them, you probably paid tens or hundreds of thousands of dollars into your pension fund for years. But now that you’re ready to receive benefits, the company no longer exists, the money has disappeared, or it was underfunded. What should you do?

The pension fund lawyers at Nix Patterson are on your side. We have spent years fighting for the rights of retirees like you. One of the first concepts you’ll need to understand, though, is ERISA.

What Is ERISA?

If you run into one of the pension problems below or your request was denied, it’s essential to understand the Employee Retirement Income Security Act (ERISA). The federal government enacted ERISA in 1974 to protect American workers’ pensions and other retirement assets.

The law established rules that qualified retirement plans must follow to ensure that plan assets are not misused. ERISA also covers some non-retirement benefits, including health and disability insurance. Plans that must adhere to ERISA rules include:

• Defined-benefit plans
• Defined-contribution plans, including 401(k)s
• 403(b) plans
• Employee stock ownership plans
• Profit-sharing plans

ERISA states that a fiduciary has control or discretionary authority over a retirement plan’s assets or management. Fiduciaries who fail to follow ERISA rules of conduct can be held liable for restoring financial losses to the program. The law also establishes minimum standards for participating in pension plans, benefit accrual, vesting, and funding.

A pension fund lawyer can help you make an ERISA claim and fight for your pension rights. Nix Patterson’s attorneys can assist with an ERISA claim to potentially help you get the money you are entitled to.

Common Pension Fund Problems and How an Attorney Can Help

Workers put aside a lot of money in pension plans for their retirement, but sometimes things go wrong. Some of the common pension fund problems that a pension fund lawyer can help you with are:

Pension Plan Was Underfunded

One of the most significant issues we see with pension plans is that they’re underfunded. This issue is especially acute with pension funds run by multiemployers. This is a pension plan that is mainly for union members who are employed by more than one company.

The Department of Labor lists pension plans whose funding status is critical, declining, or endangered. Approximately 120 plans in 2020 were in critical condition, and 61 were endangered. A plan is funded at 65% or less if it is essential. An endangered program is funded at 80% or less.

Some pension plans that were deemed underfunded in 2020 were the Automotive Industries Pension Plan, Lumber Industry Pension Plan, and Bricklayers and Trowel Trades International Pension Fund.

While most multiemployer plans are not underfunded, Congress provided funds for them in the American Rescue Plan Act of 2021. The law offers funds to help pension plans at risk of insolvency.

Benefits Are Miscalculated

Another common pension plan problem is worker benefits being miscalculated. Below are some causes of pension calculation errors:

• All compensation, including overtime, bonuses, and commissions were not included in pension benefits calculations.
• The pension calculation wasn’t based on all years of service at the organization.
• Your plan administrator used an improper benefit formula.
• The pension plan used incorrect Social Security data to determine your benefits.
• Account assets were not valued correctly.
• Your company didn’t make mandatory contributions.

If you think you’re being paid less than you should be, a pension fund lawyer can help you attempt to determine what your benefit payments should be.

Company Goes Bankrupt

Pension liabilities can make some large companies financially unstable, thereby risking workers’ retirement benefits. For instance, Sears declared bankruptcy in 2018, and its CEO said the $4.5 billion it paid into pensions in the previous 13 years made it harder to compete with other retailers with smaller pension obligations.

Note that your company’s pension finances are separate from its business finances. So, a company can go under but still have a pension fund with enough assets to pay its obligations. Or, the company can be doing well financially and have an underfunded pension plan.

Pension Plan Loopholes

A pension plan that the US government gives church status can save money because they do not have to pay into a pension insurance fund unless they wish. But if they do not, workers who pay into the plan will not have their benefits insured or covered under ERISA (see below).

Most church pension plans do not have federal pension protections, and these plans do not have to pay pension benefits equitably. They also do not have to fund their plans enough or even tell their workers about plan investments or pension benefits.

If you’re employed by a church or religious organization that isn’t protected by federal pension law, the laws of your state likely apply. Workers who think their religious employer denied them pension benefits should talk to a Nix Patterson pension fund attorney about possible legal action and other options.

How Can You Protect Your Pension Benefits?

You may be able to file an ERISA claim with a pension fund attorney, but it’s best to avoid the problem from happening in the first place. One way to avoid pension problems is to have several sources of retirement income, including savings, pensions, Social Security, and other investments. More tips to keep your retirement and pension benefits on track include:

Ensure Your Contact Information Is Accurate

Ensure your contact information is updated with any organization that is supposed to pay you a pension. This is especially important if you do not work there anymore. Your former organization should know how to get ahold of you so you can receive your benefits upon retirement.

There are tens of thousands of workers who have unclaimed pension benefits. In addition, it’s easy to lose track of an employer’s location as the years pass, and many shut down or are bought out.

Keep Accurate Records

Next, review the company’s annual financial disclosures and keep a copy in a file. Then, when you plan to retire, review these records. Check that your years of service and salary are accurate.

Employees should also hold onto their W-2 documents to prove what they have earned. They also should hold onto their plan benefit statements, pension plan notices, etc. Then, if the company miscalculates your pension benefits, you have proof of what you’re owed. 

Contact Our Nix Patterson Pension Fund Lawyers Today

If you believe your pension rights were violated, it is beneficial to reach out to a lawyer who understands the complexities of this field. Learn about your pension fund legal options by contacting the pension fund lawyers at Nix Patterson now.