Fort Worth pension lawyers represent clients in Texas in pension and other employee benefits issues. Pension plans are retirement plans funded by an employer as an employee’s compensation for work. Pensions can be complicated benefit plans and there is a lot of room for confusion, incorrect information and manipulation by the employer. If you believe your employer inaccurately calculated benefits, wrongfully deprived you of pension benefits or mismanaged the pension then you should take action immediately.
Pension plans in Fort Worth, Texas
What most people call pension plans are defined benefit pension plans. Under employee benefit laws, “pension” is a term for a retirement plan that includes 401k plans, 403b plans as well as defined benefit plans. The use of “pension” to mean only defined benefit plans is almost universal beyond the benefits industry and benefits lawyers.
A defined benefit pension plan is similar to a life insurance annuity. It is a promise to pay a stream of income in the future based upon some calculation. Traditional pension formulas calculated benefits on a fraction of annual wages and years of service so the plan rewarded loyalty. There are several formulas in use today although traditional formulas and cash balance formulas are the two most popular.
One difficulty often seen in Dallas and Fort Worth is the overlap of several benefit formulas within the plan. This often happens in employers like AT&T where employees worked for several businesses spun off from AT&T only to be later re-acquired. Employees also move divisions with different formulas or move from bargained to non-bargained positions which have different formulas.
As a result, employees may have multiple formulas and the plan uses a master formula to figure out how to resolve the conflict between multiple formulas. This creates opportunities for incorrect benefit amounts when the employer fails to apply the correct formula. Fort Worth pension lawyers help people understand their benefits and pursue benefit corrections.
Employers fund pension plans based upon their expectation of payable future benefits and invest the money set aside in the plan to use investment returns to partially fund benefits and reduce their costs. This creates a lot of opportunity to mismanage funds or manage funds in a way that is beneficial to the employer at the expense of retirees or future retirees. It also brings companies in the benefits and securities industries to try to earn the pension’s business. Those companies do not always have the pension’s best interests at heart.
Pensions management is complex and creates opportunities to negligently or fraudulently mismanage the plan. The plan relies on complicated formulas to calculate benefits and convert benefits into various payment options. The formula may rely on decades of data which may flow across several benefit formula changes, mergers, acquisitions and other corporate actions.
Many people involved with pension management are smart human resources professionals but not experts in employee benefit laws or pension calculations. Errors are possible at many steps. This complex administration is also costly which creates incentives to reduce expenses and complexity. That can lead employers to take unreasonable steps to reduce their burden.
Pension laws in Texas
In Texas most pensions are regulated by ERISA, the Employee Retirement Income Security Act of 1974. ERISA sets out a large regulatory system for benefit plans, including pensions. ERISA regulates benefit formulas, recordkeeping and trust management of pension funds. It requires plan administrators to operate the plan in the interest of its participants rather than the employer.
This federal law gives employees remedies against employers who violate employee rights to pension benefits. Public employee pensions are governed by Texas law, for state employees, and federal law, for federal employees and military servicemembers. These laws create their own employer duties which are similar, but not always the same, as ERISA.
Common ways employers violate ERISA include:
Payment arrangements with benefit plan service providers that permissibly launder money from the pension to the employer or its owners
Failure to maintain adequate pension records
Apply the wrong benefit formula to reduce pension benefits
Apply incorrect discount rates on pension payment options
Delay payments beyond reasonable plan administration needs
Failure to protect the interests of alternate payees and beneficiaries
Allow imprudent investment of pension trust resources
Use the pension trust resources for the employer’s needs through unlawful loans, acquiring trust investments at unreasonable prices, self-dealing purchases from employer to trust
Violating your ERISA rights can result in improper reductions in your benefits, delays to payments and other real harm. Pension mismanagement can result in this harm across the board to all employees and retirees. If your employer violates your rights then you should talk to a Fort Worth pension lawyer right away. There are specific processes to assert rights under ERISA and failing to follow those processes can delay or prevent resolution to your claims.