Financial Adviser | Pensioner wants access to former employer’s contribution
I write having bumped into, on the Internet, the article you wrote in The Sunday Gleaner in 2010 'How to treat a vested pension member's employer contributions'. The article got my full attention because I have been hoping to find a solution to a pension dilemma I am faced with, wherein I worked with a company for about 25 years, but when I left that company in 2002, I had no choice but to take my portion of the pension fund, but the employer's contribution was left behind. I am now 66 years old and I have no pension, because my intention to personally invest my pension portion did not work out as planned.
I was a vested employee since I contributed to the pension for about 20 years. I am now wondering if there is any way that I could now receive a pension from the employer's contribution I left behind. At the time, the employer's contribution was also viewed as part of my salary package. If you have any help/advice, or if you could point me in a direction, what steps to take, if any, I would appreciate it. Thank you and looking forward to your reply.
FINANCIAL ADVISER: It is not automatic that you would get a pension although you worked for as long as you did with the company.
Whether you qualify for retirement benefits or not, your contributions having been refunded depends on the provisions stipulated by the plan's rules. In the case of a defined benefit plan, which promises a pension computed by a formula based on pensionable years of service and salary, it could be that having taken the contributions, you could have a residual pension. But it is also possible that your pension could be reduced to zero.
If it is a defined contribution plan, your qualifying for the employer's contribution would depend on the termination provisions in the plan rules. In addition to vesting, the rules may also state the conditions under which you would qualify for the employer's contributions. There are, however, some rules that state no conditions.
Where it is conditional, if you do not comply with the conditions, by, for example, taking a refund of your basic contributions, you would forfeit the employer's contributions and any benefits from such contributions.
Where the vesting is unconditional, although you have taken your contributions, the employer's contributions that remain would provide you with a pension at retirement age.
I suggest that you check with the human resource department of your former employer to see if there is a record of pension benefits for you and, for your own peace of mind, request a copy of the handbook of the pension fund.
- Oran A. Hall, the principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. Email firstname.lastname@example.org