Private employers often have wide discretion in how they choose to provide or not provide retirement benefits to their employees. However, while employers are generally not required to provide retirement programs for employees, approximately 70% of employees in America have some sort of retirement package available to them. Knowing the details of your plan is important as the rights and benefits available vary widely between retirement programs.
An employee is often eligible for a wide variety of benefits programs that come with their employment. Some benefits may be fully covered by the employer, while others may require the employee to contribute payments as well. Employers have a duty to fully explain the details of benefit packages including if there are any special qualifications required for the employee to qualify (i.e. must work for the company at least 10 years to receive a pension).
A pension is a fund that is created during an employee’s working years, which provides payments to the employee after their retirement. There are two primary types of employee pensions:
Federal law allows employers to exclude some employees from retirement plans. For example, an employer can reserve retirement benefits exclusively for salaried employees.
To qualify for a pension program, employees must generally wait for their rights to the plan to vest. Rights usually vest when an employee has worked five to ten years with the same employer. An employee can lose the rights to the pension if they leave the job before the rights have vested.
Once the pension has vested and the employee has a right to the retirement benefit, the employee usually has the choice to either leave the funds for retirement or to withdraw them early. However, withdrawing retirement funds early often results in severe tax penalties.
The Employee Retirement Income Security Act (ERISA) was created to monitor health plans and pensions offered by private employers. Specifically, ERISA provides protections to health plan recipients and beneficiaries by requiring employers to maintain and manage plans appropriately. ERISA ensures compliance through monitoring and prosecution of violators and empowers plan members and beneficiaries to file claims for ERISA violations when necessary.
Employee benefit and retirement plans can be extremely complicated, as are the regulations that govern them. An experienced employment lawyer can assist an employer in creating a pension plan that complies with federal regulations such as ERISA. In addition, if you are an employee that has been denied benefits owed to you, consulting an employment lawyer can help you identify if you have a claim for damages.
Last Modified: 03-07-2018 12:42 AM PSTLaw Library Disclaimer
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