PRC Fact Sheet Answers Questions on Multiemployer Plan Rescue Law’s Implementation

dbrandolph — Mon, 10 Jan 2022 21:39:52 +0000

Last March 11 was a joyous day for the Pension Rights Center, multiemployer defined benefit plan members, plan retirees and their families. Thanks to a joint (and painstaking) seven-year effort to inform and convince Congress of the need to address the systemic threat posed by a pension plan insolvency calamity, President Joseph R. Biden signed into law the Butch Lewis Emergency Pension Plan Relief Act.

The law authorizes the U.S. Treasury Department to provide as many as 250 financially struggling multiemployer plans (covering up to three million plan members) with a one-time grant large enough to enable eligible plans to continue paying promised benefits through 2051. Under the grant, additional money is provided for eligible plans to cancel previous benefit cuts. The new law should also improve the Pension Benefit Guaranty Corporation’s (PBGC) ability to continue to pay guaranteed benefits for insolvent plans.

With the PBGC now beginning to process and approve plan applications for funds and finalizing regulatory guidance under the law, the Pension Rights Center has published “Common Questions About the Butch Lewis Act” to provide up-to-date information about the law and its implementation.

In the fact sheet, PRC sheds light on some of the most pressing concerns of plan retirees and their families, such as: What happens if an eligible plan decides not to apply for funds under the law? Many other common questions are answered.

If the fact sheet doesn't answer your questions, send them to us and we will get back to you.

Monday, January 10, 2022

John Deere workers successfully resist demand for pension freeze of new hires

dbrandolph — Fri, 03 Dec 2021 19:10:00 +0000

Chalk up a victory for a traditional defined benefit pension plan and its members. About 10,000 striking John Deere Co. workers are returning to work under a new contract that, among other provisions, removes language from an initial tentative bargaining agreement that would have prevented new employees from joining the company’s pension plan.

When 90 percent of the workers, represented by the United Autoworkers of America, rejected the initial agreement on October 10, they sent a strong message to the Illinois-headquartered machinery manufacturer that they placed a high value on the long-term integrity and strength of their pensions.

John Deere was already operating under a two-tiered structure, providing full pensions to workers hired before 1997 and a reduced pension for those hired later. When the company proposed a three-tier structure that would have given only a 401(k) plan to employees hired after November 1, 2021, the employees overwhelmingly said no. Their actions ensured that all bargaining unit members would have guaranteed lifetime benefits they could count on.

As the John Deere workers demonstrated, defined benefit plan pensions are worth fighting for. The guaranteed lifetime income provided by these plans, on top of Social Security, gives workers the best chance of achieving a financially secure retirement. Workers who must rely solely on 401(k)-type defined contribution plans bear all the risk of potential investment crashes. Those who have defined benefit plans can sleep much easier at night knowing that their company is required to make good on its pension promise.

Friday, December 3, 2021

Watch Out for 401(k) Fees

JSmith — Fri, 15 Oct 2021 18:17:21 +0000

The Pension Rights Center has long warned consumers to be aware of the fees charged by 401(k) plans.

That message was reinforced by syndicated columnist Michelle Singletary in her article “Your 401(k) is pocketing fees on your investment. Many people don’t realize it.” Singletary told her readers “It’s important that you understand that the fees you’re being charged matter,” and that people who think there’s no cost to invest in these plans are wrong.

The article highlights a GAO study that found 40 percent of 401(k) plan participants don’t understand the fee information provided by their plan and 41 percent incorrectly believe they are not paying any 401(k) fees.

As Singletary states, “What’s important to grasp is that whatever you’re charged has an impact on your returns.” The higher the fee, the less you will have in your retirement account when you retire. Even a one percent difference in fees charged can significantly reduce your retirement account. She cites an example from the Labor Department showing that over a period of 35 years a $25,000 account balance with returns averaging 7 percent was reduced by 28 percent when fees were increased from 0.5 percent to 1.5 percent.

How do you find out about your 401(k) fees? The Labor Department requires 401(k) plans to disclose the fees they charge. However, fee disclosures can be presented in a way that is not transparent and that include unfamiliar terms, such as asset-based fees. GAO found that 45 percent of participants are not able to use the information given in disclosures to determine the costs of their investment fees. (GAO 21-357, Highlights.)

The Pension Rights Center has always been supportive of better and improved disclosures. But we also have an additional concern that wasn’t mentioned in Singletary’s article.

We are worried that many employers will adopt a new 2020 Department of Labor disclosure system that permits plans to place disclosures on the internet so that participants must search the plan’s website, or other websites, to find the information that is rightfully theirs. Under this system, all disclosures, including fee disclosures, may be compromised – or lost completely.

PRC has been fighting to repeal, or significantly reform, this new “notice-and-access” rule that will make it harder for people to see the disclosures to which they are entitled. The notice-and-access system is complicated. It requires an electronic device for access, such as a smartphone, to receive electronic messages from the plan by text or e-mail that will tell them where to search on the internet to find a disclosure. The new rule creates barriers that could put millions at risk of losing some or all of the benefits they earned during a lifetime of work - due to lack of internet access and skills and lack of paper documentation to later show their rights to benefits.

While there are other methods of disclosure available to employers, it is expected that many employers will choose the new “notice-and-access” system of delivery because they believe it will be cheaper and easier for them – while there is little evidence that it is of any benefit to most workers and retirees.

Workers and retirees are still largely in the dark about this rule and need to be informed. No longer will it just be a matter of understanding fee disclosures, it could be a matter of finding the disclosures in the first place. It is important to know that if your 401(k) plan or defined benefit plan uses a notice-and-access system for disclosures, you have a right to opt out and request that all disclosures be sent to you on paper. Additionally, you can request a paper copy of any disclosure that is sent to you by the notice-and-access system.

Fees are important and they are difficult enough to understand. Be sure to request that fee disclosures be delivered to you in a manner that you can easily receive, read, and save for comparisons at a later time.

The Pension Rights Center wants to ensure that people receive and understand their fee disclosures and other plan information. This is why we object to the new notice-and-access system of delivery.

Friday, October 15, 2021

What Women Facing Divorce Must Know About Spousal Retirement Benefits

dbrandolph — Wed, 06 Oct 2021 19:06:00 +0000

Divorce can be both emotionally traumatic and financially devastating – especially to older women who are as much as three times as likely as men to be below the poverty line in retirement.

That’s why it’s important for older women and all others experiencing a divorce to know that they may be entitled to a share of their former (or soon-to-be former) spouse’s 401(k) and pension benefits – which are likely to be among the most valuable financial assets in a marriage. Under the law in most states, retirement plan assets earned during a marriage are considered to be marital property that can and should be divided. It’s therefore advisable for couples to make these assets part of their property settlement agreement negotiations and their divorce decree.

If you, or someone you know, is navigating a divorce, this blog is for you. It explains some of the steps you should take to protect yourself and highlights potential pitfalls that can deprive you of your legal right to a portion of retirement benefits. Not receiving your rightful share can make the difference between retiring with adequate income – or ending up financially insecure.

Here are some questions to ask: What retirement plan(s) does my spouse participate in, what benefits have been earned, and how much will be payable at retirement? This information can be obtained by asking your spouse directly or by contacting the companies that your spouse worked for during the marriage. If the plan does not respond to a written request for information, the Employee Benefits Security Administration can assist with obtaining the information (call 1-866-444-3272 or submit your question online). Another option would be to have a lawyer subpoena the information.

Armed with such knowledge, you (or your lawyer, if you have one) can negotiate the division of your marital property, including retirement benefits. In divvying up marital assets, parties should make sure that the divorce decree clearly lays out whether and how retirement benefits earned during the marriage will be split. For pension benefits, you also need to be certain that the decree addresses whether survivor benefits will be awarded. This should be done before the divorce is finalized because it’s almost impossible to make changes later!

Often, a regular divorce decree is not enough to obtain the benefits awarded in the divorce. Once you have obtained a decree (or court approved property settlement agreement) that spells out how the retirement benefits are to be divided, you will need a Qualified Domestic Relations Order (QDRO). The QDRO is sometimes written as part of the divorce decree but usually it’s a separate document.

The QDRO is a detailed legal document that must be submitted to and approved by a retirement plan before it will pay a former spouse (known as an alternative payee in pension lingo) his or her share of the ex-spouse’s benefits. The QDRO must contain information required under the federal pension law known as the Employee Retirement Income Security Act of 1974 (ERISA).

This document doesn’t become qualified until it’s accepted by the plan and thus, some people refer to it as a domestic relations order or DRO before it is accepted. You might think of the DRO as a caterpillar. Once it’s accepted by the plan it transforms (butterfly-like) into a beautiful protective legal document—now called a QDRO.

It’s critical to submit the QDRO to the plan for acceptance as soon as possible, since if your spouse dies or remarries before the QDRO is submitted, your ability to get a share of these benefits could be put in jeopardy. This is also true if your spouse retires or withdraws funds.

It’s worth pursuing a QDRO to secure your financial future even though the path to getting one can sometimes have obstacles. Although you shouldn’t be discouraged, you should know that many divorce attorneys are unwilling to draft QDROs because of their complexity and it may be difficult or expensive to find someone else to draft it.

Nevertheless, it’s important to have someone who is competent draft the QDRO because plans may ultimately reject the order if it doesn’t comply with ERISA or the plan’s specific requirements. This could mean that you’ll need to have the QDRO redrafted, resubmitted to the court and then sent back to the plan, all of which are time-consuming and expensive endeavors.

Keep in mind that QDROs only apply to private-sector employer plans and while government and church retirement plans often have a similar document that they require to divide the benefits, such public-sector and church plan documents often have different names and requirements.

Those who remain uncertain about dealing with QDROs should know that the PRC has launched an Initiative on Women and Retirement at Divorce to bring together a range of experts and organizations to make the QDRO process easier and more efficient for everyone involved. Additional information will be posted as it’s developed.

PRC also has a helpful guide offering tips for individuals going through a divorce. The guide was created by the Pension Rights Center, the National Council of Juvenile and Family Court Judges’ Resource Center on Domestic Violence: Child Protection and Custody, and the National Clearinghouse on Abuse in Later Life.

Below are more links to divorce and retirement financial security materials.

What is a QDRO and Why Should I Care?

These are links from the Women’s Institute for a Secure Retirement (WISER):

Wednesday, October 6, 2021

Congress considers provisions that would limit when retirement plans can recover overpayments

egilbert — Fri, 13 Aug 2021 18:13:00 +0000

In my last blog post, I talked about how often we hear from people who cannot locate their retirement plans, and how Congress is taking steps to address this issue. Provisions related to lost retirement plans are included in legislation now pending in the Senate and House of Representatives. Two of these bills also include provisions related to another longtime Pension Rights Center priority—unfair recovery of mistaken overpayments, or “recoupment.”

In her recent article, Congressional proposal would limit when retirees must return pension overpayments, CNBC reporter Sarah O’Brien explains how recoupment often works: a retirement plan realizes that they have mistakenly been paying someone too much, and then will seek to recover the money they have accidentally overpaid. Many plans will give the retiree the choice of either paying back the overpayment in a lump sum, which can be tens or even hundreds of thousands of dollars, or he or she will see their monthly benefit reduced. This reduction to recover the overpayment happens in addition to the reduction of the monthly benefit to the correct amount, and the result is sometimes as much as a 60-70% reduction in a person’s monthly benefit.

As mentioned in the article, there is usually no way for someone to know that their retirement plan has been overpaying them. Retirement benefit calculations are complicated, and it’s common for mistakes to be made. Generally, a retirement plan will discover the mistake when undergoing a routine audit. Here at PRC we have even heard from people who have asked their retirement plan to double check that their benefit has been calculated correctly, only to have the plan come back to them years into their retirement when they discover an error in the calculation.

The amount of money a retirement plan is seeking to recoup can be very high, because there is currently no legal limit on how many years back the plan can go when calculating how much they have overpaid someone. This is one of the things the new legislation will change if passed, by prohibiting “plans from seeking recoupment if the first overpayment occurred more than three years before the participant (or beneficiary) is notified in writing about the error,” O’Brien explains. The legislation would also prevent plans from charging fees or interest on the overpayments, and it would also limit the amount that retirement plans can reduce a benefit, so that the amount “being paid back yearly could not exceed 10% of the amount the person was overpaid.”

These provisions are included in the Securing a Strong Retirement Act of 2021 (H.R.2954), which was passed unanimously out of the Ways & Means Committee in the House of Representatives on May 5, 2021, and in the Retirement Security and Savings Act (S.1770), introduced in the Senate on May 20, 2021.

While recoupment is a common practice among retirement plans, it is not legally required that a plan recoup an overpayment. If you are facing a benefit reduction because your retirement plan has been overpaying you, one of the regional pension counseling projects funded by the U.S. Administration on Community Living may be able to help you, or you can reach out to us.

Friday, August 13, 2021

Congress gets closer to addressing the issue of lost retirement plans

egilbert — Fri, 16 Jul 2021 17:16:38 +0000

Here at PRC, we often hear from people who worked for a company that has since moved, been bought, or gone out of business, and they cannot find their retirement plan. The good news is that Congress seems to be getting closer to addressing this issue. In May of 2021, Senators Elizabeth Warren (D-MA) and Steve Daines (R-MT) re-introduced the Retirement Savings Lost and Found Act (S.1730).

In his recent column, The Savings Game: Congress can make it easier to find lost retirement funds, Elliot Raphaelson explains some of the key provisions of the bill. First, it would establish an online pension registry inside a new Office of Lost and Found housed in the Pension Benefit Guaranty Corporation (PBGC). If a retirement plan changed its name or address or was sold, they would be required to forward this information to the database. This would help individuals search for pension and 401(k) plans that are “lost” when their former companies move or change corporate structures.

Addressing this issue has long been a priority of the Pension Rights Center. As Karen Ferguson, PRC President, says in the column, “this will help retirees locate the pension and other retirement benefits they earned but cannot find because their former employers changed their names, addresses or structure. Currently, thousands of individuals contact pension counseling projects and government agencies each year seeking help in finding their lost pensions. This important bill will close a critical and too-long-overlooked gap in our nation’s private retirement system.”

The bill also addresses the issue of “forced transfers,” where plan administrators may transfer small accounts of former employees out of the retirement plan, if such a transfer is permitted by the plan rules. The Retirement Savings Lost and Found Act would require plans which force out small accounts of $1,000 or less to send the account balance to the Office of Retirement Saving Lost and Found if they cannot locate the participant. Then, individuals would be able to go to the database to find their lost money. As Raphaelson explains, “the bill requires reporting to the PBGC for unclaimed forced-out accounts in excess of $1,000, but less than $6,000 that are transferred to an IRA. Individuals with small forced-out accounts will be able to search the database to find contact information for the financial institution holding their IRA. The bill raises the force-out limit from $5,000 to $6,000.”

These lost plan provisions have also been included in the Securing a Strong Retirement Act of 2021 (H.R.2954), which was passed unanimously out of the Ways & Means Committee in the House of Representatives on May 5, 2021, and in the Retirement Security and Savings Act (S.1770), introduced in the Senate on May 20, 2021.

We are hopeful that Congress will act to pass these provisions, as they will help many retirees across the country who are struggling to locate the retirement benefits they worked for and earned.

If you are looking for an old retirement plan and need help, see if you are covered by one of the pension counseling projects, or reach out to us.

Friday, July 16, 2021

Retirement Plan Literacy—Answers to Common Questions: Part III

dbrandolph — Wed, 28 Apr 2021 21:09:00 +0000

In this, the third part of our April financial literacy month series, we answer one more of the top five questions that the Pension Rights Center commonly gets from people looking for a comfortable retirement. Part I of the series can be found here; Part II here. Unless stated otherwise, answers relate to company or union sponsored private-sector retirement plans. We believe that being financially literate about your retirement plan is likely to pay off for your future.

Why do I have to sign a form before my spouse can collect their pension?

When workers who participate in a defined benefit pension plan retire, they typically receive a guaranteed annuity payment every month for life. Usually, the amount of their ultimate monthly payment continues to grow the longer they work for their employer (or, if the plan is provided jointly by a union and a group of employers, for the employers that have signed on to the retirement plan). Please note that the rules for 401(k)-type defined contribution plans are different and aren’t part of this discussion.

Surviving spouses of plan participants are entitled to a plan survivor benefit that is paid to them every month for the rest of their lives after their participant spouse dies.

By providing monthly income for life both to the participant and to their surviving spouse, defined benefit plans ensure that neither the participant nor the spouse will outlive their plan retirement income.

Federal law also states that the surviving spouse of a deceased plan participant must receive at least half of what the member was receiving every month. Unlike in defined contribution plans, there is no risk of a defined benefit plan participant spending the entire retirement benefit and failing to leave behind a survivor benefit for their spouse.

The only exception is if a spouse signs a form giving up his or her right to receive lifetime monthly payments. The spouse must either have this form notarized or sign the form in the presence of retirement plan staff.

Why might a spouse give up the right to a monthly survivor benefit payment if nobody else other than the spouse can receive it? First, plans typically reduce the amount that the participant receives in retirement to pay for the monthly survivor benefit. Couples may decide that it makes more financial sense to give up the survivor benefit to receive higher payments up front. This may make sense if the spouse is significantly older than the participant or is seriously ill and unlikely to outlive the member. It may also make sense if the spouse has another source of significant retirement income.

A spouse must also provide written consent if the participant wishes to take the benefit as a one-time lump sum payment. Not all defined benefit plans will allow a participant to take a lump sum benefit payment, but some do. For more information on taking a lump sum versus monthly payments for life, see Part II of this series and our fact sheet.

A plan participant cannot take any actions that would reduce their spouse’s future survivor benefit without the spouse’s consent. It is not uncommon, however, for spouses to give up the survivor benefit and later regret this decision. There have been cases in which a spouse has signed a form waiving the survivor benefit by accident or without fully understanding what the form meant. For instance, there have been cases in which spouses did not speak English but were told to sign documents giving up their survivor benefits that were written in English only.

In some cases, participants have committed fraud to try to eliminate the survivor benefit without their spouse’s consent. This includes forging signatures or even having someone pose as the spouse at signing time, and it is more likely to happen in relationships where there is abuse or the couple is estranged. However, we are also aware of cases in which a well-intended plan participant forged a spouse’s signature on retirement paperwork, didn’t read the paperwork closely enough, and accidentally gave up the spouse’s survivor benefit. Even though there are notarization requirements to prevent fraud and forgery, mistakes still get made.

We recommend that participants and spouses fill out any retirement paperwork together to make sure that accidents don’t happen. Spouses also have the right to request documents and information from the retirement plan. This means that spouses can contact the retirement plan to ask whether the survivor benefit has been waived and can seek copies of any forms relating to the survivor benefit that the plan may have on file (though the plan may require you to make this request in writing). It is best to do this while the participant is alive so you can correct any problems before it is too late. If the survivor benefit has been waived and the participant dies, the plan is legally considered to have paid out the entire benefit and has no legal requirement to pay anything to the surviving spouse.

If you don’t think you gave up your survivor benefit, but the plan later says you did, you can ask the person running the plan, known as the plan administrator, to provide you with the paperwork your spouse filled out when he or she retired and the form that the plan says you signed giving up the survivor benefit. If the signature on the form does not look as if it is yours, you should contact a pension counseling project or, if there is no project in your area, contact the Pension Rights Center or the U.S. Department of Labor’s Employee Benefits Security Administration.

If you or your spouse worked for a state, city, or county government, you may find that the pension plan rules say that retirees do not have to get the consent of their spouse to give up survivor benefit protections. This allows the retirees to receive higher benefits during their lifetimes. But the benefits stop when they die.

For state and local government employees these rules vary from state to state. You can read our fact sheet on spousal consent in state retirement plans here.

Wednesday, April 28, 2021

Retirement Plan Literacy—Answers to Common Questions: Part II

dbrandolph — Fri, 23 Apr 2021 20:11:00 +0000

In this, the second part of our April financial literacy month series, we answer two more of the top five questions that the Pension Rights Center commonly gets from people about their retirement benefits (Part I can be found here). Unless stated otherwise, answers relate to company or union sponsored private-sector retirement plans. Being financially literate about your retirement plan can pay off for your future.

I can’t find the company I worked for many years ago. How can I locate the company to apply for my retirement benefit?

Companies often move, change their addresses, and are bought and sold. They also go bankrupt and end or combine their pension plans. When this happens, it may be difficult for former workers to locate the company or their retirement plan to get information about their pension or 401(k) benefits. But it may be possible to track down the plans.

There’s good news for people with retirement plans that terminated (often because their former employers went bankrupt). They can seek help from the federal Pension Benefit Guaranty Corporation (PBGC)’s Missing Participants Program. While the program’s list includes missing participants from terminated defined benefit pension plans who are entitled to benefits, it does not include all such missing participants from 401(k)s and other individual account plans.

If your former company still exists but was bought or sold, changed its name, or moved, you will need to dust-off your detective hat and trench coat. You should begin your sleuthing by contacting anyone you think might know what happened to the company, such as friends, relatives, co-workers, union officials and former supervisors. An internet search could turn up new contact information for the company or articles discussing news about the company’s move, merger, name change, etc, You can also review state incorporation records or company filings with the Securities and Exchange Commission (SEC).

Another strategy you can use to find your employer’s latest address and contact information is to search the U.S. Department of Labor’s (DOL) lists of employer “Form 5500” financial reports and at www.freeerisa.com (free registration required). Try both searches for the most recent information.

If you live or worked in one of the 30 states covered by the U.S. Administration for Community Living’s Pension Counseling and Information Program, you may be able to find help from one of the six regional pension counseling projects that we work with. One of those projects recently published an informative blog post on how they tracked down a lost pension plan.

Benefits Advisors at the DOL can also help track down lost plans.

Legislation has been introduced into Congress to create a retirement plan registry for all Americans with a company or union retirement plan. The new Office of Lost and Found would be located at the PBGC. It would collect information about changes in company and retirement plan names, addresses and structures so that, in the future, individuals will be able to locate their plans and benefits when it’s their time to retire.

For now, people looking for resources to help them find a lost retirement plan may want to read this booklet or contact a pension counseling project or DOL Benefits Advisor. You can also reach out to the Pension Rights Center.

My pension plan is offering me a lump sum payment. Should I take it instead of a lifetime monthly benefit?

Most experts advise against taking a lump sum unless a plan participant has a serious illness or other special circumstances. Also, some special early retirement benefits can be lost by taking a lump sum. But individual situations differ.

It may be very tempting to take a large lump sum payment if offered by an employer instead of a much smaller seeming lifetime monthly payment. But you should think carefully before accepting the offer.

The purpose of a pension is to provide lifetime retirement income. It does this by offering an annuity that can be counted on to continue as long as you are alive.

Unlike pension annuities, lump-sum payments don’t ensure lifetime retirement income. Such payments are calculated to be equivalent to annuity payments for the expected lifetime of retirees. If retirees live beyond their life expectancy, the annuity is the better deal. This is especially true for women, given that plans are required to calculate lump sum payments without accounting for the fact that women have longer life expectancies than men. The annuity protects retirees from outliving their resources. For married retirees, this insurance typically extends beyond the plan participant’s life in the form of monthly annuity payments for the lifetime of their surviving spouse.

As previously mentioned, these annuity payments continue for your lifetime, no matter what happens in the often volatile investment markets. Even better, the plan and its consultants bear all the risk of providing those payments, while retirees who choose annuities can concentrate on living their lives and doing what matters most to them.

Pension payments are also insured by the federal Pension Benefit Guaranty Corporation up to certain limits (see our fact sheet), and, if the plan sells the annuity obligations to an insurer, the payments are protected up to the limits established by the State Guaranty Association in the retiree’s state.

There are circumstances, however, where it may make sense for retirees to take the lump-sum payment. These include people with serious illnesses who have relatively short life expectancies, and either are unmarried or have spouses who also have short life expectancies. Those who have ample guaranteed income for life from other sources may also be candidates for taking the lump-sum.

Those who are confident in their investment knowledge and skills may decide to take the cash, but not only do they bear the risk of investing these funds, they also must ensure that this pot of money continues to pay income throughout their lifetime. They must also ensure that their spouse is capable and willing to take on these responsibilities if they die.

For additional information, please see our fact sheet that provides information about the pros and cons of taking lump sums.

Friday, April 23, 2021

Retirement Plan Literacy – Answers to Common Questions

dbrandolph — Fri, 16 Apr 2021 16:59:00 +0000

April is financial literacy month. That is why you are likely to see publications offering articles with financial planning recommendations such as: set goals, track spending, boost savings, and understand concepts such as “diversification” and “compound interest.” Some articles may suggest that you can “become a millionaire” by the time you reach Social Security age if you follow the authors’ advice.

Although these articles can be very helpful, we have decided to take a different path. Instead of the standard advice, we will offer a multi part series discussing financial questions that you may not find elsewhere that will tell you what you need to know if you have access to a retirement plan at work and hope to one day have a secure and dignified retirement.

In this, the first part of the series, we will answer one of the top five questions that people looking for a secure retirement commonly ask to the Pension Rights Center. Unless stated otherwise, answers relate to company or union sponsored private-sector retirement plans. We believe that being financially literate about your retirement plan is likely to pay off for your future.

What is a pension plan and how is it different from a retirement savings plan such as a 401(k) plan?

For workers who qualify for benefits, a pension plan (also known as a defined benefit plan) is the best financial tool available for achieving a secure retirement. Pension plans are set up by an employer (or by a group of employers and a union) and they typically provide lifetime guaranteed income at retirement age based on the number of years you work and a percentage of your salary. Employees do not have to decide whether to put money into most private-sector pension plans. The contributions are made by employers as part of the wage package. Workers who have defined benefit plans are fortunate because they will never have to worry about outliving their income.

Unfortunately, fewer employers are offering defined benefit pension plans these days. They most commonly are found in unionized industries in the private sector and among state, local and federal employers. In a recent issue brief, the RRF Foundation for Aging said that "The private sector has not sufficiently supported workers' savings, and pensions, envisioned as a critical pillar of late life security, are increasingly rare." For more information on this, we have a chart that shows how many American workers participate in retirement plans.

Retirement savings plans such as 401(k) plans (also known as defined contribution plans) provide benefits based on the amounts contributed and investment earnings. Since these savings accounts are meant to provide retirement income, early withdrawals before age 59-1/2 will usually result in a 10 percent penalty tax. In most retirement savings plans, workers choose whether they want to put money in the plan. To encourage contributions, many employers offer to match their employees’ contributions.

One important difference between a pension plan and a retirement savings plan involves who bears the risk of potential investment loss. In a retirement savings plan, a worker typically chooses among different investment options and bears the risk of any losses. In other words, individual workers must decide whether and how much to contribute and which investment strategies to use, and then come up with a sensible strategy to make sure that their money lasts through their retirement years. They are fully responsible for ensuring their lifetime income.

In a pension plan, that risk falls entirely on those who fund the plan, usually the employer, which must pay a specific benefit under a formula set by the plan’s consultants, no matter how the plan’s investments perform. The federal Pension Benefit Guaranty Corporation provides insurance protection for most defined benefit pension plans that are unable to pay what they have promised. This protection covers a worker’s pension benefits up to a set limit. If a plan decides to sell plan assets to an insurance annuity provider, which it has the legal right to do, retirees’ annuity payments will be paid by the insurance company. If the insurance company becomes insolvent, retirees will receive protection up to the limits prescribed by their state’s insurance guarantee fund.

There is no federal or state insurance protection for assets in retirement savings plans.

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.

Friday, April 16, 2021

Retirees Celebrate Historic Pension Victory

Kfriedman — Thu, 08 Apr 2021 15:12:39 +0000

With the enactment of the Butch Lewis Emergency Pension Plan Relief Act, retirees across the country are “dancing in the streets” to celebrate the wonderful news that their pensions have been saved. Press the link to join the celebration and show-off your latest dance moves.

We thought you’d like to see some of the celebratory e-mails we’ve received from wonderful activists – and our Butch Lewis dance partners.

“We did it! We did it! We did it! Thank God almighty! We held the line, spending endless hours and resources telling our members of Congress not to cut our pensions. I thank my whole retiree family, the National United Committee to Protect Pensions (NUCPP), the Pension Rights Center, the members of Congress who got this done and voted for this bill. We couldn’t have done it without everybody working together.”- Rita Lewis, Westchester, Ohio, who became a leader of the grassroots movement after her husband Butch, an acclaimed activist who inspired the new law, died while fighting against retiree benefit cuts

“Our loyal supporters stood with us as we stood by them. We knew we had to work with all stakeholders to achieve a resolution. We became a stronger team, a loyal team amongst ourselves. We came, we fought, we never gave up, we won. We thank so many people, including all of you at PRC."- Mike Walden, Cuyahoga Falls, Ohio, President of the NUCPP and a member of the Central States Pension Fund.

“We are thankful to all those who guided us, educated us and stuck with us all the way to justice. We will remain grateful from here to the final coda.” - Steve Nathan, retired pianist, Nashville, Tennessee, and member of the American Federation of Musicians & Employers Pension Fund (AFM-EPF), which announced it would withdraw its application to cut the pensions of its workers and retirees because of the Butch Lewis Act.

“We are beyond excited. Still can’t believe it. We felt like a ton of bricks was removed from our shoulders. We cried happy tears. For the first time in years, I don’t have to worry about every little thing I buy. We don’t have to worry about our kids taking care of us and we can help them if necessary. God bless all of you who got this passed for us” - Laura Caporino, Hampstead, NC, wife of Anthony, whose pension was cut by 70% under the Local 707 Pension Fund.

“This legislation never would have happened without the Pension Rights Center. It should be an amazing feeling to have touched the lives of so many in such a positive way.” - Cathy Green, Lake Stevens, Washington, member of the Office and Professional Employees International Union Western States Pension Plan, whose plan cut her pension, and those of other workers and retirees, by 30 percent.

“We had the fight, the determination and the leadership to see this through. I will always be forever grateful for the great people from the Pension Rights Center, the National United Committee to Protect Pensions and the powerful pension committees from across this nation with their ‘Never give up" attitude’. We could not wait for someone else do it. Our victory has now been won and lifelong friendships made.”- Cindy McDaniel, Appleton City, Missouri, activist spouse of Ted McDaniel, a member of the Central States Pension Fund.

“I would like to thank PRC for all your hard work to fix our pension. You guys did a great job getting the pensions back for me and the other retirees. It was a great relief to finally see that my pension will be restored” -Douglas Rumsey, Port Jervis, New York, member of the Road Carriers Local 707 Pension Fund.

“I was up all night watching the Senate vote on the American Rescue Plan on C-SPAN and I actually cried when it finally passed with the Butch Lewis Act intact. This was overwhelming and we have been hoping would happen for so long.” -Pat Overstreet, Hinckley, Ohio, spouse of Walt Overstreet, a member of Iron Workers Local 17 Pension Fund, whose pension was cut under MPRA by more than 50%.

“First, on a personal note, there is no way to fully express our gratitude for the work you and everyone at PRC has done on our behalf. Without this relief, thousands of retirees through no fault of their own would have seen devasting and unsustainable cuts to their pensions. This will absolutely allow those who have toiled their entire lives to live out their retirement with dignity.” -Dennis Dreith, woodwind instrumentalist, composer, orchestrator and conductor, Woodland Hills, California, member of the American Federation of Musicians & Employers Pension Fund (AFM-EPF).

“I’m still pinching myself. I feel like our grassroots movement will go down in the history books.”- Ken Stribling, Vice President of the NUCPP and co-leader of the Wisconsin-Milwaukee-Southeast Committee to Protect Pensions.

We thank everyone who helped make this win possible. Working with all these terrific activists has been a wonderful experience for all of us at PRC. We are so happy that their pensions have been saved and restored. We look forward to continuing these friendships and working with all of you in the months and years to come.

Thursday, April 8, 2021

RRF Foundation for Aging releases issue brief on economic security later in life

Kfriedman — Mon, 15 Mar 2021 21:13:00 +0000

The RRF Foundation for Aging is one of the few private foundations in the United States devoted exclusively to aging issues. Its mission is to improve the quality of life for older people. One of its Priority Areas is increasing economic security in later life. To further this goal, RRF recently released an Issue Brief outlining both the challenges to achieving economic security and some of the solutions, including providing access to sufficient income, enhancing financial knowledge and skills, and advocating for a stable, equitable retirement system.

The brief, “Working Together to Achieve Economic Security in Later Life,” begins a series that RRF says will describe its “approach to funding” and how it works to help older adults improve their financial well-being. The brief says that RRF looks “forward to joining with others in this important work” to help older adults improve their financial well-being.

Among the facts highlighted in the brief are:

The private sector has not sufficiently supported worker savings, and pensions, envisioned as a critical pillar of late life security, are increasingly rare. According to the Federal Reserve Bank of St. Louis, in 2016 just 62.1% of pre-retirement U.S. households participated in a retirement plan.

A lifetime of confronting systemic inequities around gender, race, and sexual orientation has contributed to many older adults’ financial struggles. The RRF brief highlights statistics showing that “older women of all ages are more likely than men to live in poverty.”

Social insurance programs, such as Social Security and Medicare, have not kept up with inflation. The brief points to a 2018 study by the Senior Citizens League showing that “Social Security benefits have lost 34% of their buying power since 2000.”

We are honored and grateful that RRF shines a special spotlight on the Pension Rights Center, which is a long-time grantee of the foundation. The brief describes the PRC as a “stalwart advocate since 1976” that has “developed a strategic approach, with the support of several RRF grants, to reform the pension system and improve the financial security of older people.”

“PRC exemplifies how thoughtful collaboration can lay the groundwork for system reforms to help older people,” RRF says in the brief. The Foundation says that we: provide “training and technical support to a network of seven regional centers around the country that help people recover lost pensions”; “protect divorced older women” by making the process of getting a Qualified Domestic Relations Order (QDRO) more accessible; and use advocacy to protect “retirees from pension cuts due to insolvency of multiemployer pension plans and promoting solutions to stem this crisis.”

The Issue Brief also highlights other key projects funded by RRF to help bolster economic security, including the Illinois Pension Assistance Project, in partnership with the University of Massachusetts Boston, to provide pension counseling and individual advocacy to older adults in Illinois; the Social Security Works Education Fund to empower and activate people to lift up the importance of Social Security; and WISER (Women’s Institute for a Secure Retirement), which is launching a Financial Caregivers Project to provide a one-stop clearinghouse for information on the financial aspects of caregiving.

Monday, March 15, 2021

Prospects Brighten for Much Needed Pension Rescue Bill as It Heads to House Floor Vote

dbrandolph — Fri, 19 Feb 2021 20:24:00 +0000

The House Ways and Means Committee significantly boosted the prospect for passage of much needed pension relief that would protect the hard-earned and promised benefits of active and retired truck drivers, nurses and health care workers, plumbers and construction trade workers – people who we now recognize and honor as America’s essential workers in this time of crisis.

On February 12, the Committee “marked up” and voted in favor of the Butch Lewis Emergency Pension Plan Relief Act of 2021, legislation that would not only protect retirees’ pensions from devastating cuts, but also would stabilize their financially struggling plans while keeping intact the federal Pension Benefit Guaranty Corporation’s (PBGC) insurance program that backstops their benefits. The Butch Lewis Act is part of a Covid-relief package that is slated for a full House vote by the end of February. Then the bill will head to the Senate for consideration. The legislative process being used, known as “reconciliation,” is designed to pass the Senate with only 51 votes or, alternatively, a simple majority. Butch Lewis will have to meet certain technical criteria to be included, but we are hopeful for the bill’s passage.

The Pension Rights Center wrote a letter to the Committee in strong support of the Butch Lewis Act saying that “the relief is long overdue and must be passed now.” We also pointed out that as businesses and shopping areas have been shuttered, “retirees with pensions …continue to use their income to support local businesses, boost tax revenue and help reduce the strain that would otherwise fall on community medical and social service resources.”

PRC is one of dozens of organizations, businesses and unions supporting the bill, including the AFL-CIO, the National Association of Manufacturers, United Steelworkers, UPS, International Association of Machinists and Aerospace Workers, ERISA Industry Committee, the Retirement Security Coalition, the Alliance for Retired Americans, the International Brotherhood of Teamsters, the National Coordinating Committee for Multiemployer Plans, Spangler Candy Company, Associated Wholesale Grocers, Kellogg Company, Schnuck Markets, and many others.

Given the level of support, and the importance of the issue being solved, we were disappointed by the Washington Post’s February 17 editorial that was critical of multiemployer relief being included in the Covid relief package.

In fact, Covid-relief legislation is exactly where multiemployer reform belongs.

Multiemployer plans have been clobbered by the pandemic just as much as other parts of the economy. Even before last spring’s lockdowns, 124 multiemployer plans were facing insolvency – with some huge plans, like the Central States pension fund, about to implode in the next few years. Consequently, about 1.5 million plan members and their spouses face draconian cuts to their benefits.

The pandemic has severely exacerbated the crisis, placing even financially stable plans at increased risk. According to a report by Segal, an additional 180 plans could face insolvency due to the pandemic, bringing the number of plans careening toward failure “to over 300,” potentially affecting “over 2.5 million workers, retirees and beneficiaries.”

The Butch Lewis Act provides a commonsense and straightforward way to address the multiemployer crisis and avert another economic catastrophe. The bill would provide special financial assistance to troubled multiemployer plans meeting certain eligibility criteria to ensure that they can survive into the future and continue paying workers’ and retirees’ benefits. The bill would also accomplish one of the PRC’s top priorities by enabling eligible multiemployer plans to restore benefits they previously cut under the Multiemployer Pension Reform Act.

Friday, February 19, 2021

Welcome Labor Department Guidance on Missing Participants

JSmith — Fri, 12 Feb 2021 16:24:00 +0000

Recently issued Department of Labor guidance is an important step toward resolving the “missing participants” problem.

Following several years of investigating how plans do, or do not, stay in touch with former employees who are due benefits, in January 2021, the Labor Department published a best practices guide for pension and retirement savings plans, “Best Practices for Pension Plans.” The new Labor Department guidance should help plan officials keep track of former employees who have earned retirement benefits.

In 2020, Labor Department investigations recovered $1.48 billion of benefit payments for 29,600 former employees of large companies who had not been informed of their rights to benefits at retirement age due to inaccurate contact information, poor recordkeeping and inadequate searches by their plans.

The Labor Department’s best practices are just common sense methods for keeping plan records up-to-date. They include monitoring the plan for indicators of problems, such as the number of former employees who have not claimed their benefits when due or the amount of returned mail and bounced e-mails for incorrect addresses. It is particularly important when records are transferred during changes in corporate structure or changes in record keepers, that plans verify employment information and contact information for participants and beneficiaries, and search for individuals who have not claimed their benefits at retirement age.

The Pension Rights Center and the regional pension counseling projects continually hear from retirees who are unable to locate their retirement plans. Congress is currently considering legislation that would create a lost plan registry that will help solve this problem for the future. The Labor Department’s best practices guide will complement that legislative initiative by encouraging companies to seek out former employees who are currently looking for their plans.

The guide notes that the best practices for searching for missing participants include checking related plan and employment records, checking with designated beneficiaries, using free internet search engines and public databases, sending certified mail, using a commercial locater service, checking with colleagues of the missing participant, and registering the missing participant on a pension registry. Many of these practices are included in the Labor Department’s Field Assistance Bulletin 2014-01.

The best practices guide also includes ways to communicate with former employees to ensure that they stay in touch with the plan. For example, plan notices should include regular reminders to participants to keep the plan informed of address or family changes. In recognition that former employees may not open a notice from an unknown company, the best practices include sending notices to former employees using the name of their former employer rather than the name of a new company. Additionally, plan communications should clearly and prominently state the reason for the communication.

In addition to the Best Practices for Pension Plans, the Labor Department issued a Compliance Assistance Release 2021-01 and a Field Assistance Bulletin 2021-01. The compliance assistance release outlines the Labor Department’s investigative approach to determining whether plan officials are meeting their obligations to former employees who have earned retirement benefits under traditional pension plans. This includes reviewing plan records to determine whether procedures are adequate to maintain contact with participants and beneficiaries. Labor Department investigators may review routine plan communications, such as benefit statements, and procedures for contacting participants near normal retirement age. Procedures for searching for missing participants will also be reviewed.

The Field Assistance Bulletin sets forth a temporary enforcement policy for transfers of missing participant account balances of terminating defined contribution plans, such as 401(k)s. The policy permits transferring missing participant accounts to the Pension Benefit Guaranty Corporation after a diligent search and encourages plan officials who do not transfer accounts to the PBGC to use the PBGC’s Expanded Missing Participants Program to list the missing participants and where their accounts can be found.

We are encouraged that the Labor Department is addressing missing participant issues and we are hopeful that plan officials will follow the Labor Department’s best practices for seeking out and staying in touch with their former employees.

Friday, February 12, 2021

NIRS Report Says U.S. Gets Overwhelming Economic Benefit from Pension Payments

dbrandolph — Fri, 15 Jan 2021 20:44:00 +0000

Payments from traditional pension plans generated a staggering $1.3 trillion in U.S. economic output in 2018, according to a report recently released by the National Institute on Retirement Security (NIRS).

The NIRS report, Pensionomics 2021: Measuring the Economic Impact of Defined Benefit Pension Expenditures, showed that, in 2018, some $578.7 billion in pension benefits were paid to 23.8 million American retirees, including $44.2 billion paid to some 3.8 million beneficiaries of multiemployer plans. These are plans which are jointly operated by a union and two or more employers.

The report provides powerful evidence that multiemployer pensions need to be protected as the U.S. economy struggles to recover from the coronavirus recession. That’s why PRC believes that Congress and the incoming Biden Administration must immediately address a pension insolvency problem that threatens the benefits of more than 1.3 million plan retirees, as well as the viability of the federal Pension Benefit Guaranty Corporation’s fund that backs plan benefits.

It’s clear from the report that permitting multiemployer plan cuts would have an oversized and devastating impact on the U.S. economy. That’s because, as the report indicates, pension expenditures have a large multiplier effect in that each dollar of pension benefit landing in the hands of a retiree supports $2.19 in economic benefit nationally.

In aggregate, retirees’ expenditures from pension payments in 2018 supported nearly 7 million jobs, added more than $700 billion to the nation’s Gross Domestic Product (GDP) and enhanced government tax revenue to the tune of nearly $192 billion, according to the report.

Friday, January 15, 2021

RRF Foundation for Aging’s president urges action to address plight of older adults

Kfriedman — Wed, 06 Jan 2021 18:19:00 +0000

While Americans of all ages are cheering the prospect of vaccinations, the pandemic has already “put older people’s economic well-being at risk,” Mary O’Donnell, president of the RRF Foundation for Aging, said in an important and timely op-ed recently published in Crain’s Chicago Business.

When the pandemic landed ashore earlier this year, many people in their 60’s, 70’s and beyond were already reeling from the job losses, forced early retirements and depletion of their savings resulting from the Great Recession of 2008, according to O’Donnell. The pandemic-caused recession landed a second gut-punch, not only increasing health risks, but bringing more “unemployment, involuntary retirement, hunger and even homelessness.”

To reverse this trend, O’Donnell urged action to simplify and increase access to taxpayer supported resources and ensure that “all older adults have access to sufficient monthly income,” including a financially secure Social Security System.

O’Donnell ended her article on a hopeful note. She said the “current situation has brought the precariousness of so many older people’s financial situations into harsh focus. A just society should ensure that we can all live with dignity and independence as we grow older. Now is the time to mobilize financial supports that build resilience through this difficult period and allow us as we age to continue to make important contributions, not only to the economy but to our families and communities.”

The RRF Foundation for Aging focuses on improving the quality of life for older people. Improving Economic Security in Later Life is one of their five priority areas. RRF has played a critical role in supporting the Pension Rights Center over the years, most recently for our Pension Promises Initiative which is working to stop pension cuts to workers and retirees in underfunded multiemployer plans. The RRF Foundation for Aging also provides critical support to the Illinois Pension Assistance Project, which provides hands-on assistance to individuals in that state who need help with their retirement income problems.

Wednesday, January 6, 2021

Retirement & Divorce: New Report Highlights What We Don’t Know

espreiser — Fri, 18 Dec 2020 21:50:45 +0000

In August 2020, the U.S. Government Accountability Office (GAO) published a report on qualified domestic relations orders, or QDROs. For those not familiar with what the GAO does, it’s an agency that responds to inquiries from members of Congress who want to know more about how federal tax dollars are being spent in order to improve operations of the federal government.

QDROs are a special court order divorced couples need to obtain in order to divide a company or union retirement benefit at divorce. Read our fact sheet on QDROs here.

The QDRO process, as it exists, is complex and inefficient. Despite the fact that as many as half of U.S. marriages end in divorce, most Americans have never heard of a QDRO. Many couples fail to address the retirement benefit at all during their divorce, even though retirement benefits are often the largest asset in a marriage other than a home. This often disproportionately harms one of the spouses – usually the woman, if it’s an opposite-sex marriage – if that spouse earned significantly less retirement income than the other.

A lot of people who are legally entitled to a share of a former spouse’s retirement benefits pursuant to their divorce decrees never actually end up getting one because the QDRO process is so difficult to navigate.

Retirement plans and family law attorneys and judges also find the QDRO process difficult. Having to review and deal with poorly drafted orders drives up administrative expenses for plans. And family law professionals find themselves suddenly having to become experts on the federal private retirement law, which is outside their specialty.

In 2018 the Pension Rights Center launched an Initiative on Women and Retirement at Divorce to try to figure out what the problems are and start working with a wide array of partners to identify and implement solutions. One big hurdle: data. There is a ton about QDROs that we don’t know. In fact, it seems that nobody knows because no one is researching it.

We are missing some very basic data about QDROs. How many QDROs are drafted in the U.S. each year? Of those, how many are actually submitted to a retirement plan? How many are accepted and how many are rejected? Of the QDROs that are rejected, how many are actually resubmitted? How much retirement money is being left on the table every year because people aren’t getting the QDROs they need? This information seems straightforward, but no one is collecting it systematically.

Enter the GAO, and its report, titled DOL Could Better Inform Divorcing Parties About Dividing Savings. The “DOL” here refers to the U.S. Department of Labor.

The GAO made a valiant effort to try to shed light on this issue, despite also confirming that there was very little data available on QDROs for it to work from. GAO staff spoke to us, to QDRO drafters, to retirement plans, and to a number of other impacted stakeholders. It was able to extrapolate some information through these anecdotal discussions and other data sources. Perhaps the most important finding is that very few people obtain QDROs relative to the number of people who go through divorce. This is a huge problem, because this means that a lot of people who are dependent on a spouse for retirement income are not getting a fair share of that retirement income if they divorce, even though they are entitled to a share under state law.

GAO also found that members of historically disadvantaged groups are less likely to be availing themselves of the QDRO process than groups with privilege, though it attributes this to the fact that disadvantaged groups are less likely to have earned benefits under a retirement plan in the first place. GAO also confirmed that individuals with low-income are less likely to be able to access resources necessary to navigate the QDRO process.

But GAO isn’t responsible for regulating retirement plans. GAO ultimately found that the Department of Labor, which is charged with overseeing disclosures and reporting from retirement plans, could be doing a lot more to collect important information about QDROs from retirement plans. The Department already collects substantial amounts of information from retirement plans nationwide. This data just doesn’t include anything on QDROs. GAO also found that the Department could be doing more to increase public awareness about QDROs and the QDRO process.

We agree that the Department of Labor collecting and making public more information about the nation’s QDROs would be extremely helpful toward our goal of making the QDRO process easier for everyone involved. We look forward to working with the Department, especially as our Initiative on Women and Retirement at Divorce continues to move forward. If you want to know more, we recommend checking out the GAO’s report here. It is a long but worthwhile read.

They say that the first step to solving any problem is acknowledging you have one. The GAO’s report is a very important first step.

Friday, December 18, 2020

Legislation offers hope for finding lost pensions

kgarrett — Wed, 08 Jul 2020 17:25:00 +0000

(Update: February 12, 2021. The Lost and Found provisions of the Warren/Daines bill are included in the Securing a Strong Retirement Act of 2020 (H.R. 8696). It is likely that this bill will be reintroduced into Congress in 2021.)

In my 15 years at the Pension Rights Center my primary responsibility has been helping people get assistance with their pension problems. The most frequent question I get from callers is, “I worked for a company for a number of years and now that company is gone and I can’t find my retirement plan. What can I do?”

At this point I have to explain to callers that the problem is all too common. In countries like the United Kingdom, they have a pension tracing service that helps people locate their lost retirement plans. In the United States, we do not have any registry or tracing service, so if someone left a company years ago, it can become complicated to find their plan when the worker is ready to retire.

Individuals with pension or 401(k) plans that terminated (often because their former employers went bankrupt) can seek help from the Pension Benefit Guaranty Corporation (PBGC)’s Missing Participants Program. But if their former company still exists but was bought or sold, or changed its name or moved they will have to become part-time detectives.

This can be very challenging. To start, they can contact friends, relatives, co-workers, old supervisors, or by cold calling a series of corporate phone numbers. They can also review incorporation records or company SEC filings, but these are just breadcrumbs that may not lead anywhere.

If they live or worked in one of the 30 states covered by the U.S. Administration for Community Living’s Pension Counseling and Information Program, they may be able to find help from one of the six regional pension counseling projects that we work with. The New England Pension Assistance Project recently published an informative blog post on how they tracked down a lost pension plan. Benefits Advisors at the U.S. Department of Labor can also help track down lost plans.

Fortunately, a solution has been proposed for this problem. Recently, Senator Elizabeth Warren (D-MA) and Senator Steve Daines (R-MT) introduced legislation that would create a retirement savings registry for all Americans with a company or union retirement plan. The Retirement Savings Lost and Found Act of 2020, would create an online “Office of Lost and Found” that would pool all of the relevant information about changes in the names, addresses, and structure of retirement plans into one centralized database so individuals would easily be able to find their retirement plans when it is their time to retire.

The legislation, which has the support of retiree and industry groups, was introduced into the House of Representatives by Representative Suzanne Bonamici (D-OR) and Jim Banks (R-IN) as H.R. 7439. The Pension Rights Center applauds Senators Warren and Daines and Representatives Bonamici and Banks for proposing this important legislation. Thanks to their leadership, millions of future retirees may have a way to easily find their lost pension and 401(k) money.

If you need help locating your retirement benefit, see if you are covered by one of the pension counseling projects, or reach out to us.

Wednesday, July 8, 2020

A helpful guide for people awarded retirement benefits at divorce

egilbert — Thu, 25 Jun 2020 19:27:33 +0000

There is now a helpful new guide for individuals who are going through a divorce and have questions about dividing retirement benefits.

The guide – created by the Pension Rights Center, the National Council of Juvenile and Family Court Judges’ Resource Center on Domestic Violence: Child Protection and Custody, and the National Clearinghouse on Abuse in Later Life – highlights tips for individuals going through a divorce. Many people do not know that they can ask for a share of a spouse’s retirement benefit at divorce, but retirement benefits are often the largest asset in a marriage. It is important to take the right steps during the divorce proceedings and after, or a divorced person may not receive the benefits he or she is entitled to.

The guide explains different types of retirement benefits, discusses special considerations for individuals in controlling or abusive relationships, and describes how to get a special court order called a QDRO and what to do with it. Family courts, organizations that assist survivors of domestic violence, and other groups that work with people going through divorce can use this guide to help individuals understand their retirement rights at divorce.

This guide is among PRC’s many activities designed to make the process of dividing retirement benefits at divorce more accessible and easier to understand. We’ve launched an Initiative on Women and Retirement at Divorce to ensure that women and other vulnerable people going through a divorce know that they need a QDRO, and to make the process of getting a QDRO more efficient and less costly. We have brought together stakeholders from all sides – retiree organizations, women’s groups, pension plans, employers, financial institutions, family attorneys and judges – to develop recommendations for making the QDRO process easier for consumers and less burdensome for retirement plans.

PRC Fact Sheet: I’m getting divorced: What is a qualified domestic relations order and why should I care?

PRC Blog Post: Getting a divorce? Skip the roses for Valentine’s Day – and protect your pension

Thursday, June 25, 2020

On Saving Pensions, One Step to Go, On Composites and GROW, We Say No!

Kfriedman — Fri, 29 May 2020 19:45:43 +0000

PRC is thrilled that on May 15, as part of the latest COVID-19 relief bill (known as the HEROES Act), the House of Representatives passed the well-crafted Emergency Pension Plan Relief Act (EPPRA) to shore-up underfunded multiemployer pension plans. We urge the Senate to ensure that EPPRA’s provisions are retained in any compromise bill it works out with the House.

But before the next virus response bill is finalized, there are some pension-related provisions that must be dropped from the massive 1,800-page legislative tome – the poorly designed Giving Retirement Options to Workers Act (GROW Act).

PRC has worked with tens of thousands of retirees for the past six years to try to fix the insolvency fiasco facing at least 130 multiemployer plans, which are negotiated by a union and two or more employers. The House did its part by approving a fix for these underfunded plans. Will the Senate listen to retirees and rescue their pensions or will the retirees be betrayed and left empty-handed?

We are hoping that the Senate will show its wisdom by choosing the rescue.

By including EPPRA in the next COVID-19 legislation, Congress will preserve the full pensions of workers and retirees while stabilizing for decades to come the federal agency that insures our nation’s private pension plans, the Pension Benefit Guaranty Corporation (PBGC).

I can’t tell you the number of calls I get from retirees saying “Karen, I can’t take it much longer. We keep thinking that finally, finally this issue will be solved, but then Congress disappoints us.”

“Hundreds of thousands of retirees across the country, like me, are watching closely the vote of each member of Congress to see if they are for or against the rescue of our hard-earned promised pensions,” Kenny Stribling, a 68-year-old retired truck driver from Milwaukee said. Stribling promised his wife shortly before she died of pancreatic cancer that he wouldn’t give up the fight for the pension he earned during a 30-year career until a solution was found. He is vice president of the National United Committee to Protect Pensions, comprised primarily of retirees who belong to the collapsing 400,000-member Central States Pension Fund.

Steve Nathan, a 69-year-old pianist from Nashville who will lose 40% of his hard-earned pension unless there is a quick solution told PRC that, “We have waited and waited for Congress to act appropriately, and now COVID-19 has run out the clock. The Senate should join the House in passing the EPPRA now. The longer they wait, the worse the situation will be.”

Given what’s at stake for so many people who worked hard, played by the rules and contributed so much to this country, I say to the Senate: Just do it! Negotiate with the House and pass EPPRA or come up with an equally fair and effective solution

PRC strongly supports EPPRA because it shores up underfunded plans by providing the PBGC with the funding to take on some of the liabilities of ailing plans. It involves a “partitioning” process that will ensure that the plans survive for the long-term and are able to pay in full the earned benefits owed to workers and retirees. The proposal also increases the guarantees paid by the PBGC when plans fail and would restore benefits to retirees who have already had their benefits cut because of the unfair provisions of the Multiemployer Pension Reform Act of 2014.

EPPRA shares a similar structure to a proposal advanced by Senate Finance Committee Chairman Charles Grassley (R-IA) and Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander (R-TN).

As we’ve written before, the retirees and workers who are most at risk of losing pensions are the people who built – and continue to build – the country and make it great. They are also the ones we are relying on during lockdown — truck drivers, grocery workers, health care workers, ironworkers and the musicians who keep playing online or on their balconies to boost our spirits.

The Senate and House must pass provisions to help severely underfunded plans. But to protect the multiemployer system, Congress must also drop the GROW Act from the COVID-19 legislation.

Unlike EPPRA, which will strengthen failing multiemployer plans and protect workers, retirees and the PBGC, passage of the GROW Act would undermine the multiemployer plan system by weakening currently well-funded plans and creating new inferior “composite” plans that do not provide guaranteed benefits. It would also result in the underfunding of the PBGC.

PRC therefore urges the Senate to negotiate with the House and pass EPPRA while saying no to GROW. The GROW Act is also vigorously opposed by AARP, the Western Conference of Teamsters, the SEIU, IBEW, Steelworkers, Machinists, Boilermakers and other unions and organizations.

Last but not least, the center also cheers the House for including in the HEROES Act a provision that would provide grants to community-based organizations to help low-income divorced women and survivors of domestic abuse receive their court-awarded retirement benefits. This provision was originally introduced by Senator Patty Murray (D-WA) and House Members Jan Schakowksy (D-IL) and Lauren Underwood (D-IL) as part of the Women’s Retirement Protection Act (S.975, H.R. 2005).

Friday, May 29, 2020

Notes From Home

Thu, 14 May 2020 22:20:00 +0000

Our last day in the PRC office was March 13th, so we are in our 10th week of working from home. It’s been a busy time, and we’ve all found different ways to adjust and be productive from our homes. Here’s what some of us have been up to.

Emily Gilbert

I don’t have an office in my home, so I’ve had to create one – my bookshelf is currently functioning as a standing desk. Much of my day-to-day work is the same during this time. I’m still writing and editing blog posts, writing our e-newsletters, working to get our new website up and running, and helping Kyle and Emily Spreiser respond to people across the country who have questions about their retirement benefits.

When I am not working, I have been doing a lot of cooking and baking. I got a 25-pound bag of flour at Costco and have been putting that to good use. My dad sent me a pizza stone and a rolling pin, so I made my own dough one weekend and experimented with different toppings. He also sent me a candy thermometer and a marmalade recipe, so I now have what feels like a lifetime supply of grapefruit marmalade. I’ve made a few different kinds of bread, and I even tried to make fresh pasta! It tasted good, but definitely would have been easier if I had a pasta machine.

Kyle Garrett

Going back to the days of dial-up AOL service in the 1990s, I’ve always had a desk and a computer at home so the transition to teleworking wasn’t too difficult for me. I drive to the PRC office once or twice a week to handle administrative matters for the office and respond to phone calls (people continue to need help with their pension problems). My activities (like paying rent and bills) fall under ‘essential business activities’ as defined by the DC government’s stay-at-home order and as such I am allowed to go into the office for this purpose.

It is quite jarring to see almost no traffic or people on my journey to the office at the height of rush hour. When I am not working, I have been going on a lot of walks, downloading old puzzle games or trivia games, and checking out old tv shows I’ve missed over the years. My mother sent me a care package which included a six- pound bag of gummy bears so when the quarantine is over, my dentist will need to send her a commission, or at least a thank you letter.

Karen Friedman

My life sort of resembles the 1960s TV show Gilligan’s Island. At the beginning of March, I flew to Connecticut for what I thought would be a three-day “tour” to see my parents, but because of Covid-19 I’m now stranded and quarantined on the “island.” Of course, rather than being in the tropics with Maryann and Ginger and Mr. Howell, I’m holed up with my 92-year-old mom, my 96-year-old dad and a few aides in the house I grew up in – the longest I’ve been here since I was 20-years-old. But I’m not complaining. I get to spend time amazing quality time with my wonderful aged parents while working 8-10 hours a day in a small make-shift office I set up in their dining room, occasionally being interrupted when my hard-of hearing mom screams “Do you want lunch? What? What did you say?” This usually happens just as I’m on a phone call with staffers on Capitol Hill! But even with these interruptions, I’ve been quite productive.

We are thrilled that provisions to protect and restore retirees’ pensions have been included in the HEROES Act, which is about to be voted on by the House of Representatives, and we will be working with retirees around the country to ensure its passage in the Senate. I’m also working with colleagues to try to stop a Department of Labor rule, which will effectively deep-six important retirement disclosures, and on our new Emergency initiative to Protect Women’s Economic Security in the Time of COVID-19.

Oh, sorry, I have to go…my mom is calling me.

Emily Spreiser

Every year the Pension Rights Center hosts a national training conference for the attorneys of the six federally funded pension counseling projects. It normally takes place in-person here in Washington D.C. and the project attorneys fly in. This year, that isn’t possible. So, we are moving forward with the conference but pivoting to a remote format using a combination of different technologies (think conference calls, webinar platforms, and Zoom video chat). There has been a lot of back end logistics work, but I am pleased to say that we are still going to be offering a full conference schedule and am proud of how our team has adapted to some pretty big changes in circumstances.

And I’m continuing to work with the rest of PRC’s dedicated staff to respond to new legal challenges as they arise via phone and e-mail. I am also looking forward to co-presenting a webinar on dividing retirement benefits at divorce for the ABA Commission on Domestic and Sexual Violence on June 2.

Outside of work, I am planning to try my hand at DIY furniture upholstery with a kit I bought from an independent, woman-owned business in Austin to upholster my own mid-century modern bench using mudcloth. And I have started doing watercolor paintings and making empanadas. I am also rewatching all of Cheers and am also enjoying the new season of Kim’s Convenience – both are charming and lighthearted.

Jane Smith

The bright side of working from home has been the gorgeous spring we have had with many flowering trees and shrubs in my neighborhood. I enjoy walks on the street and occasionally meet a friend or a new neighbor- but at a distance. When the weather is decent I can eat lunch on the deck.

The downside of working from home is that I don’t have all my files and records with me. I must look up information that would be easily accessible in the office. It’s rather like reinventing the wheel, and just as slow.

Like everyone else I am looking forward to a safe end to this crisis. In the meantime I will enjoy the extra e-mails from my bored grandchildren and the family ZOOM meetings.

Karen Ferguson

The pandemic has changed my life less than that of other PRC staff members since I mostly teleworked before we were ordered to shelter in place. There is just a lot more handwashing, also more e-mails and conference calls. Every morning we all share our plans for the day and then have check-in conference calls every other day.

This has been an incredibly busy time for us since several of our top priority legislative issues are under serious consideration on Capitol Hill. At the same time, we are working to stop a range of proposed regulatory measures that would cutback important protections.

Helping us untiringly on our many projects are our wonderful consultants, Norman Stein, Bill Bortz, Terry Deneen, David Brandolph, and Debbie Chalfie. We also remain in contact with our resident artist and long-time administrative assistant Victoria Kanios who recently shared a terrific recipe for Julia Child’s French Onion Soup.

The high points of my non-workdays are sunset walks. At that time, almost everyone is home eating dinner or watching the news, so the streets are deserted. I carry a mask but don’t need it. When I see someone, it's easy to swerve six feet to avoid them -- a bit like a square dance.

Thursday, May 14, 2020