Now you see it, and now you don't.
Many Americans could unknowingly lose some of their pension benefits during the current wave of corporate takeovers or through their own neglect.Most of us will collect our pensions, but there are circumstances that can wipe out some or all of your retirement benefits. You could get nailed under some programs if you return to work, get divorced, or if your plan closes or revises its rules.
What if your plan goes belly-up? Your employer could stop your pension plan if the plan or the company is in financial trouble. Pension plans may be terminated because of other circumstances, but the plan must show it can pay accrued benefits to vested members.
If your plan is terminated because it's in financial trouble, chances are it's at least partially insured. Uncle Sam may have a portion of your pension covered by the Pension Benefit Guaranty Corporation (PBGC), the government's pension insurance program.
While the PBGC insures most pensions with fixed benefits (called "defined benefit plans"), not all of these plans are covered. If you work in a professional office (doctors, lawyers, etc.) with fewer than 25 employees, your pension is probably not government insured. Plans for religious groups, unions, and executives also may not be covered.
Even if your plan is insured by Uncle Sam, not all benefits are guaranteed. Usually the plans with the best benefits packages have the most to lose. For example, benefits above a certain amount may not be covered.
If your company pays a specified amount into your plan each year (known as a "defined contribution plan"), the PBGC does not insure your plan. You will receive a share of the amount remaining in the plan if it is terminated.
If your plan is terminated for a reason besides financial trouble, the company will give the plan's cash to an insurance company, which will then pay out all the benefits you have earned.
It's their ball. Changing rules in the middle of the game may not seem fair, but pension plans can change their requirements. However, new criteria generally only apply to the years after the change is made.
Rules also can be altered if your company is taken over or if it is merged into another corporation. Although you should receive the benefits you have already earned, your new boss may change the rules -- and end the benefits you were counting on eventually earning.
Back to the salt mines. Let's face it: some of us want to work. However, your pension plan temporarily may stop making payments if you return to the working world. If you are age 65 or older and work fewer than 40 hours per month, you can continue to work at any job and still get full benefits. However, if you work more than 40 hours per month, things could change.
When only one employer contributes to your plan, you can still work without penalty. But if you are in a multi-employer plan under a union contract, you may be forbidden to take a job in the same field as plan members.
If you are older than age 65 and your plan has stopped paying you benefits because you have taken a job, benefits must resume once you stop working.
If you retire before reaching age 65, going back to work could cause your plan to suspend your pension until you reach age 65. Although you cannot be charged penalties for returning to work, if payments were made before your plan found out about your new job, the plan may deduct 25 percent of your subsequent benefit checks until you have repaid the premature payments.
If you start working for a rival company, your plan may take away any benefits in excess of the legal minimum requirements. But this already must be in black and white, so always check your plan's rules before going back to work.
Death on the installment plan. Death or divorce can affect your pension benefits.
If you die after retirement, your spouse usually will continue to get half of your pension. Plans generally are not required to keep paying benefits to anyone other than your spouse.
If you die before retirement but after you have been vested in a plan, your spouse will get half of the benefits you earned up until your death. Your spouse may start receiving lifetime benefits during the year in which you would have first started getting your pension.
In a divorce settlement, your pension may be treated as property of your marriage, so the court could order partial payments for your former spouse.
Getting other benefits could reduce your pension. For instance, workers' compensation can shrink your retirement and disability pension payments. While your benefits cannot be reduced by unemployment compensation, if you presently are receiving a pension, you could get smaller unemployment checks.
It's always a good idea to talk to your plan representative to find out what you can count on getting at retirement.