Checking the Health of Your Pension – Mandatory or Optional?
I don’t mean to spoil your sleep, but while you slumber peacefully in the early dawn, the United States Senate is proposing a change that could affect the required contributions to your pension. Should you be concerned? Ask the American Airline employees who found their plans underfunded when their employer declared bankruptcy.
If you have a pension, absolutely.
About 25% of all management and professional workers have a pension, or a defined benefits plan. Unlike a 401k, in which the employee contributes, it’s the employer who funds — and guarantees — a pension or a defined benefits plan. And it’s Congress that decides what those funding requirements must be.So, let’s say you do have a pension.
How do you know if it’s stable or in jeopardy? You should receive an annual funding statement that reports the percentage of the defined benefit which is funded. You want to see 85-100% of the plan’s total projected benefits funded.[This statement should arrive within 120 days of the end of the plan year. Don’t be surprised if it doesn’t show up. Companies can request extensions of that deadline. It may pay to be pro-active. If your pension report is delayed, go to
http://www.pbgc.gov/wr/trusteed/plans.html to get information about the funding adequacy of your retirement plan.]
Curious about what your future benefits will be? You should be getting a benefit statement every three years. It will tell you the amount of your monthly benefit and when you’re vested. Be cautious. If you’re a long term employee, or your company was split off, the benefit may be miscalculated.
Not getting your benefit statements? It could be because you have changed employers and have lost touch with your previous pensions, or the pension administrators have lost touch of you? Go to http://search.pbgc.gov/mp/mp.aspx and this site will help you locate any unclaimed pension benefits or connect you with your possible future benefits. Do you have that same unknowing feeling about past 401K’s? Then check out:
https://www.unclaimedretirementbenefits.com/.
What’s next? Even if your pension is in good shape, it still makes good sense to make sure your retirement plans are in order. That’s how I can help. As an independent, hourly financial planner, I can work with you to determine how much you will need each year, and how much you will need to have set aside before you retire. I can also help you to determine if your assets are positioned well to meet your retirement goals. Want me to evaluate some options you may be considering? I can do that, as well.
The bottom line: whether your pension plans are well funded or not, now is the time to make sure your retirement plan is!
