Are There Errors In Your Pension Calculation...
There has been a shift in the employer-sponsored pillar from defined-benefit plans to defined-contribution. Companies started shifting away from defined-benefit plans because they were more expensive for them.
Defined Benefit Plan is the old-school plan that pays a certain portion of an employee’s final salary multiplied by the number of years on the job. The obligation and liability lies mainly on the employer...
In the second type of plan — the 401(k) in the United States is perhaps the best-known version… both sides usually still pay in, but the amount of retirement benefits depends on how the employee invests the contributions and how the markets do
The following issues and concerns are pointed at Defined Benefit plans. There are two general types of pension plans i.e. Defined Benefit Plans and Defined Contribution Plans. In general, defined benefit plans provide a specific benefit at retirement for each eligible employee, while defined contribution plans specify the amount of contributions to be made by the employer toward an employee’s retirement account.
In a defined contribution plan, the actual amount of retirement benefits provided to an employee depends on the amount of the contributions as well as the gains or losses of the account. A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance.It is still…a defined benefit plan.
The purpose of this artice is to point out to you the common causes of errors in defined benefit pension calculations.
10 Common Causes Of Errors In Pension Calculation
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All relevant compensation, such as commissions, overtime, and bonuses, (if these were to be included in your plan) was not included in calculating your benefits.
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The calculation was not based on all your years of service with the company, or all work within different divisions.
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The plan administrator used an incorrect benefit formula, such as wrong interest rate.
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Plan used wrong social security data in calculating your benefits.
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Basic information such as birthdate, and, or social security number was incorrect.
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Your company merged with another company, or went out of business, and there is confusion over which pension benefits you qualify for.
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Assets in your account were improperly valued.
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Your employer failed to make required contributions on your behalf.
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Basic mistakes were made in the mathematical calculations.
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You failed to update your personnel office with changes (marriage, divorce, death of spouse) that may affect your benefits.
Consumer Tips For Safeguarding Your Pension
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Know your pension plan. Obtain and review your Summary Plan Description (SPD), the rulebook for your pension.
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Review your individual benefit statement and individual account information. Know what your accrued and vested benefits are.
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Maintain a pension file. Keep records of where you've worked, dates you've worked there, your salary and any plan documents or benefit statements you've received.
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Notify your plan administrator of any changes that may affect your benefit payments (i.e., marriage, divorce, death of a spouse).
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Know the person in your company who has information about your pension plan and can give you plan documents.
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Know how the merger or acquisition of your company will affect your pension benefit.
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Know your pension rights. Request information on your pension rights and how to protect your pension. Call 1.866.444.EBSA (3272) for publications.
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Contact the Department of Labor's Employee Benefits Security Administration if you have any additional questions about your rights under the law.
Contacting the Department of Labor
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By Mail : U.S. Department of Labor 200 Constitution Ave., NW Washington, DC 20210
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National Toll-Free Contact Center. Live assistance is available Monday through Friday from 8:00 a.m. to 8:00 p.m. Eastern Time by calling, 1-866-4-USA-DOL, TTY: 1-877-889-5627.
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Main Contact Center Number (General DOL Inquiries):
1-866-4-USA-DOL (1-866-487-2365) Wage and Hour Division (WHD)
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1-866-4-US-WAGE (1-866-487-9243) Office of Disability Employment Policy (ODEP):
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Ryan Cass posted on Sunday, May 23, 2010
Tags: Retirement, Pension, Defined Benefit, Defined Contribution, 401k
Posted in: Site News
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