Pension funding dropped in partnership buyout

I have been an employee of a company for 23 years receiving funding for a pension which provided unreduced retirement benefits (with a medical benefit) at age 55 for me.

Four years ago I took a position in a joint partnership formed by my employer and a second company. I remained employed and paid by my original company and was told I was being seconded (leased?) to the partnership.

The second partner company has purchased the interests of my original employer to sever the partnership, and become a wholely owned subsidiary, whom I will now be employed and paid by.

I was informed yesterday, the new company will no longer fund my pension and they will tell me what my pension conversion (lump sum or annuity) will be in 6 months.

I don't even know my rights, or what questions to ask. But, I was only staying around for the pension and have better opportunities elsewhere.

Should I ask for my pension to be funded? Do I have any rights here?

Is asking for a serverance package a reasonable thing to do?

Mark S

1 answer  |  asked May 17, 2001 03:47 AM [EST]  |  applies to New York

Answers (1)

David M. Lira
Protecting Pension Rights

You can always ask for a severance package, but an employer has no obligation to give you a severance package.

Your real concern seems to be with the pension, but your situation is really a little more complex.

Basically, what is happening to you is that your old employer is firing you, and another employer is willing to pick you up without an employment application. Once you are fired by your old employer, you are going to be cut off from certain benefits. That is just the way it works.

However, there is a federal law protecting the pension benefits you have earned so far with the old employer. The law is called ERISA.

ERISA would probably require the employer to cut off continued participation in their pension program, but it would at the same time protect what you have earned so far.

With respect to the benefits that you have already earned (vested benefits), generally, you can do two things with it: (1) you can let the money stay with the old pension program, collecting interest, etc. When you get old enough, you would then be able to collect a pension. It might be reduced compared to what you could have gotten if you stayed with the older employer, but it could still be pretty valuable. (2) You could "rollover" the money into something like an Individual Retirement Account ("IRA").

Exactly what you would be able to do, and exactly what you would be entitled to receive depends exactly on how the pension plan is structured. ERISA requires that the employer (actually the pension plan) provide you information about your benefits. You should ask for a statement of your benefits. You should also ask for a copy of the "Summary Plan Description" or SPD. It might be helpful to get a copy of the "Pension Plan" with amendments, but the SPD would be enough. Based on the SPD, I or another attorney would be able to give you a more precise read on your rights.

posted by David M. Lira  |  May 17, 2001 11:18 AM [EST]

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