FREQUENTLY ASKED QUESTIONS

Employee benefits are compensation in addition to your base salary or hourly wage. There are certain legally required benefits like minimum wage and overtime compensation or unemployment compensation or Social Security and Medicare contributions. Otherwise, employers are not required to offer extra benefits to employees, but they often do as an incentive before an employee accepts the position to attract and retain high-quality talent. Some of the most common employee benefits are health insurance, retirement plans, life insurance and group disability insurance.

A pension plan is retirement plan set up by an employer or a group of employers and a union, that typically provides lifetime income for covered employees at a certain retirement age. The U.S. Department of Labor has a fact sheet that explains the differences between pensions and retirement savings plans, such as 401(k), profit sharing, and 403(b) plans.

A pension plan is a contract and each plan is different. Generally speaking, if your pension plan is paid by your employer or former employer, the plan’s rules most likely will say that your pension will be temporarily stopped if you go back to work for the same employer. If you are covered by a plan run by a union and employers, your plan may suspend your pension benefits if you return to work. To understand the exact rules of your plan, review the “Summary Plan Description” and the plan document itself.

Pension plans and insurers make errors in calculating benefit amounts that may not be discovered for years. Many plans and insurance policies also have “offsets” for other types of income such as Social Security Disability benefits and seek to recoup alleged “overpayments” that result from other income or calculation errors. If a plan or insurance company asserts an overpayment claim, you should contact Berman Legal or another attorney who specializes in employee benefits law.

Federal law sets limits each on how much can be put in 401(k). Check the IRS website.

For individuals in employer sponsored pension plans that offer lifetime monthly benefits, the law allows these plans to set a retirement age no higher than age 65. Plans can offer monthly benefits at an earlier age, in which case the Summary Plan Description (SPD) must explain the rules. To find out whether your pension plan provides retirement benefits prior to age 65, at a full or reduced amount, you should contact your pension plan and request the SPD.

There is a recent trend among employers to transfer their pension plan funds to insurance companies. Instead of federally guaranteed pensions, retirees receive “annuities.” This is sometimes called risk transfer or de-risking since the company no longer is responsible for paying benefits. Your pension benefit should not change, but the protections you will receive if something goes wrong will be different.

Yes, retirement benefits can be divided at divorce, but the divorce decree must specifically address the pension, 401(k) or other retirement plan and how it should be divided. You will also need a separate court order directing the retirement plan to pay the benefit to you.

Call Berman Legal at (215) 546-8800 to evaluate your potential pension claim and remedies.