How to Protect Your Corporate Benefits

By Elliot Raphaelson

It is no secret that corporations, over the last 20 years or so, have been reducing or eliminating corporate benefits such as pensions and health care. Corporations have the right to determine employee benefits. However, it is important for employees to take proper steps to protect the benefits they are entitled to. I will be discussing what can go wrong with your pensions, and what resources are available.

There was an excellent article in a recent Wall Street Journal about a Xerox employees have not prevailed in lawsuits.

When I started working at the bank I was with for over 20 years, employees were eligible for a defined-benefit pension plan. After an employee worked a certain number of years, he would be entitled to a pension at age 60, even if he no longer worked for the bank. (Over the last two decades, corporation management in practically every industry has eliminated defined benefit plans in favor defined-contribution plans such as the 401(k), which are less costly for corporations.) My bank terminated the defined benefit plan for new employees and for others who did not did not meet specified criteria. The human resource department issued an explanation containing a discrepancy, and I noticed I could have fallen into either category. I immediately asked HR to confirm, in writing, that I was truly "grandfathered." It took more than a week, but I finally received written confirmation that I was entitled to the defined benefit plan for as long as I worked in the bank. That has already been worth $180,000 to me. If I had not pursued the issue, I doubt that I would have been grandfathered. You must be proactive when it comes to your benefits.

The Journal article made three important recommendations: (1) When in doubt, "get it in writing." (2) Be careful with spinoffs and mergers. If you have any doubt that your benefits have changed, ask for documentation. (3) Don't depend on the official plan summary. The Pension Protection Act of 2007 allows you to request a benefit statement yearly. Ask for it.

There are steps you can take to protect your pension rights. If you think your pension check is wrong, ask the plan administrator for a detailed written explanation. You can use an actuary for assistance. The American Academy of Actuary's Pension Assistance List (www.actuary.org) provides up to four hours of free assistance.

If you believe you have a lawsuit, contact the National Pension Lawyers Network (www.pensionaction.org/npln.htm). Don't hesitate. There is likely to be a statute of limitations.

The National Center for Retirement Benefits (www.ncrb.com; 800-666-1000) does not charge to verify that your pension payments are correct. However, there is a fee if it recovers funds for you.

The Pension Counseling and Information Program (www.pensionrights.org) has worked with the U.S. Administration on Aging, and serves retirees in 29 states, providing free legal advice and assistance with benefit claims.

It is essential to understand your employer's pension plan. The two key documents you should access are the individual benefit statement and the summary plan. Both are available to you at no cost and are generally available online. Make sure you request them -- and make sure you understand them.

Corporate benefits are constantly changing, and for most they are being reduced. You must be more diligent than ever to understand the benefits that remain. So insist on written explanations, and use organizations that can provide relevant advice.

Personal Finance - How to Protect Your Corporate Benefits