Where is Your Pension Plan?

Pension PlanWhat do you really know about pension plans?

How’s your pension plan doing?

Many people know they have a pension plan, but they’re not quite sure how it works, how stable it is, or exactly how their money is invested. The details are often hazy.

Pension plans are also called “defined benefit” plans because they provide a predetermined, continuous income for retirement. This fixed payout is generally determined by factors such as your exit salary and your seniority or longevity at work. Government pension plans commonly require employer contributions, though union and private pension plans may not. 

If you do not have a pension plan:

It may be worthwhile to find out if your employer offers one. Ask for the details, and be sure to find out at what point you become eligible. It’s typical for an employee to gain eligibility after three to five years.

If you have a pension plan:

It’s important to keep tabs on it and make sure you understand it. For example – do you know if your plan is stable? Increasingly, employers are terminating pension plans and either directing pension assets into annuities or issuing lump-sum payouts to workers.

If you were in a pension plan that was terminated, or if you had a pension plan with a former employer that has since gone out of business, contact the Pension Benefit Guaranty Corporation (www.pbgc.gov). This is an agency of the federal government created to protect pension plan assets.

If you are more than five years away from retirement it may seem too soon to bother tracking down pension plan details, but it’s never too soon to start.

It’s important to get all the information you can about your plan, and once you have that information, you need to keep up with it.

After all, your retirement may depend on it.

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.