Retirement Benefits


by Tonya M. Blake

"I thought for sure my retirement check would be more than this!" "I assumed my pension was guaranteed." Why ever think or assume anything? Ask questions early and often or you may be sorry you didn't! You should carefully and thoroughly review the details of your retirement plan before you sign your retirement papers. The first step in your review process should be information gathering. Below are a few questions which will assist you in that process:

What type of retirement plan do I have? Most retirement plans can be described as either "defined benefit" or "defined contribution" plans. Under a defined benefit plan, an employer contributes moneys on your behalf into its pension account. Upon retirement, you are promised a fixed benefit. In a defined contribution plan, a individual account is established for each employee. The employee, employer, or both are responsible for contributing moneys into a retirement account for the employee. The contributions are then invested in the financial markets. The amount of your benefit will depend upon the performance of your investments. 401(k) and profit-sharing plans are two examples of defined contribution plans. Your employer may offer and you may be participating in more than one plan. Make sure your employer has the correct date of your birth, date of your hire, date of your termination or retirement, your salary and, in the case of hourly workers, the number of hours you worked. Also, ask your employer for a detailed benefit statement which explains how your benefits are calculated every two to three years. Your employer should provide you with a description of the details of your retirement plan in what is called a Summary Plan Description. Request it, read it, and hold on to it and any other statements your employer gives to you concerning your benefits.

Are my pension benefits insured? The Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency, insures the pension benefits in most defined benefit plans. Defined contribution plans and plans set up by professional service firms like those of doctors, lawyers, church groups, and federal, state and local governments are usually not insured. If your plan is insured by the PBGC, it will guarantee your pension up to a certain limit. Ask your employer if your retirement benefit is insured.

How long do I have to work before I receive a benefit? Generally, an employer can require that you complete 5 to 7 years of service before you are completely vested in any retirement contributions the employer makes on your behalf. To be vested means you have a legal right to contributions your employer makes to your pension plan. Any contributions that you make to your retirement plan are immediately fully vested.

Is my spouse or loved one entitled to my pension benefit if I die? When you retire, you will probably receive your retirement benefit as either a life annuity or a joint and survivor annuity. Under a life annuity, you receive a monthly retirement benefit for life and benefits cease after your death. Under a joint and survivor annuity plan, you will also receive a monthly pension benefit for life; however, your spouse or designated beneficiary (if the plan allows), will receive a percentage of that benefit, usually 50, 75, or 100 percent of your benefit after your death. If you elect the joint and survivor annuity plan you will receive a reduced benefit during your lifetime so that moneys are available to your spouse or beneficiary after your death. Ask your employer which options are available to you.

Finally, Why wait until the day you retire to find out about the details of your retirement plan? Contact your employer or retirement plan administrator today and get the answers that you need!

About the Author: Tonya M. Blake is a principal with Quince Moore & Associates, Inc. a human resource consulting firm. She is also a co-author of The Retirement StartUp Kit. She may be contactedat (888)463-9675 (ext:240). The Internet site for Quince Moore & Associates, Inc. is

BenefitsNews and WebLinks:
It is now more important than ever to assure that your pension benefits are being correctly calculated. A recent audit by the federal Pension Benefit Guaranty Corp. found that a significant number of participants were being underpaid. Nearly 1/3 of those underpaid in the audit were short-changed at least $1,000. Source: The Pension Guaranty Agency. The PBGC is using the Internet to find Americans who may be owed a pension benefit without knowing it. Sign on to its Internet address at: or call (800) 326-LOST to see if you or a loved one is on the list!
The Social Security Administration is now on-line! You can now order benefit information publications, obtain Medicare premium benefit information, and replace, correct, or change information on your Social Security Card by signing on to its Internet site:
Free information on employee benefits is now available from the U.S. Dept. of Labor by calling (800) 993-7542 or visit its Internet site at: