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Employees must be vigilant on retirement assets
Monday, September 6, 2010 at midnight
This Labor Day, consider how hard you’ve worked your whole life and take some time to think about your retirement. As a whole generation of baby boomers nears the next stage of their careers, the private sector retirement system has grown significantly in size and importance. There are now 700,000 private sector pension, 401(k) and other types of plans holding an estimated $5.7 trillion in assets. As these retirement assets have increased, so has the need to ensure their security, especially in challenging economic times.
The Employee Retirement Income Security Act of 1974 clearly states that these retirement assets must be used to pay for the benefits of workers and their beneficiaries. Our mission at the U.S. Department of Labor is to vigorously enforce this law, on behalf of the Americans who worked so hard to provide for their families and who are now hoping to enjoy life in their golden years. In 2009 alone, the department helped recover $1.3 billion related to pension, 401(k), health and other benefits for millions of American workers.
While the retirement assets of most workers are safely managed, a few employers abuse the bonds of trust between them and their employees and use these assets for other purposes, especially in times of financial distress. Some employers use the funds as an interest-free loan to keep the company afloat, while others may use the money for personal enrichment.
As an added challenge, some companies ultimately slip into bankruptcy, which can present a further threat to the safety of retirement assets. When companies shut down, the workers’ retirement assets may be vulnerable to creditors’ claims in connection with the company’s bankruptcy.
So what steps can you take to protect your retirement benefits?
Be vigilant! Read and retain statements you receive about your retirement account. Workers should ask their plan administrator about what happens to their benefits if the company goes out of business or is merged with or bought by another company.
In addition, employees should be aware of warning signs that their company may be experiencing financial difficulties and that their retirement contributions may be at risk.
Some of these signs include: 401(k) or individual account statements that are consistently late or come at irregular intervals; inaccurate account balances; the employer’s failure to send employee contributions to the plan on a timely basis; significant drops in the account balance that cannot be explained by market conditions; 401(k) or individual account statements that show employees’ contributions from their paychecks were not deposited; unauthorized investments listed on the account statement; former employees having trouble getting their benefits paid on time or in the correct amounts; frequent and unexplained changes in investment managers or consultants; or simply an employer who has recently experienced severe financial difficulty.
Take action! Arm yourself with information, including the plan rules, earnings and leave statements, and your benefit statement. The Labor Department has benefit advisers nationwide who can help you to better understand your plan or to obtain your benefits.
Employees are often the first line of defense in alerting the Labor Department that a company is encountering financial problems that could place their retirement assets at risk. So if you have problems getting answers about your benefits or are concerned about your plan, contact the department through our toll-free number at 1 (866) 444-3272.
We want you to help ensure that in these difficult economic times the financial distress experienced by your employer is not compromising your retirement assets. Rest assured that the Labor Department is committed to protecting the savings you have worked so hard for, so that you and your family can have a peaceful future, and enjoy the fruits of your labor. And, we’ll keep working to make sure this Labor Day – and the many more to come – are filled with promise for you, not worry.
Solis is the U.S. secretary of labor.
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