A pension plan is retirement plan set up by an employer (or by a group of employers and a union) that typically provides lifetime income at retirement age. The Department of Labor has a fact sheet that explains the differences between pensions and retirement savings plans, such as 401(k), profit sharing, and 403(b) plans:
I’m receiving pension payments each month. Can I go back to work and keep my pension?If your pension plan is paid by a company you worked for, the plan’s rules most likely will say that your pension must be temporarily stopped if you go back to work for the same employer.
If you are in a plan run by a union together with employers, your plan may suspend your pension benefits if you return to work. In some cases, the pension plan must reimburse you for the missed retirement benefits when you retire again by either paying you once for all the missed payments or by increasing your monthly pension payments going forward.
In other cases, the pension plan does not have to make up the payments you missed while you were working. This will depend on whether you retired early, whether you returned to work in the same geographic area that the pension plan covers, and whether you returned to work in the same industry, trade or craft that you were working in before you retired.
To understand the exact rules of your plan, ask the plan to provide you with a copy of its “Summary Plan Description.”
I can’t find the company I worked for many years ago. How can I locate the company in order to receive my retirement benefit?
Companies often move, change their addresses, and are bought and sold. They also go bankrupt and end or combine their pension plans. When this happens, it may be difficult to locate the company in order to get information about your retirement benefits. But with enough detective work it may be possible to track them down. To find resources that may be able to help you find a “lost” retirement plan you can read our fact sheet.
How much can I put in my 401(k) this year?Federal law sets limits on how much can be put in 401(k). These limits are changed by the IRS each year. Here is a link to our chart that outlines the contribution and benefit limits for several types of retirement plans:
My pension plan is offering me a lump sum. Should I take it instead of a monthly benefit?Most experts advise against taking a lump sum unless you have a serious illness or other special circumstances. Also, some special early retirement benefits can be lost if you take a lump sum. But individual situations differ. We have a fact sheet that provides information about the pros and cons of lump sums:
Also, if you know a financial planner or investment advisor, you might want to ask their advice.
My employer says that it has ties with a church. Will that affect my pension benefit?Yes, this may affect whether your pension is protected by the federal pension law known as the Employee Retirement Income Security Act (ERISA). You should read our fact sheets on church pension plans if you think your pension plan might be affiliated with a church:
I participated in a pension plan for many years and want to draw my monthly pension early for an emergency but the plan says I cannot take the benefit until I turn age 65. Is this legal?
For individuals in employer sponsored pension plans (i.e. plans that offer lifetime monthly benefits), the law allows these plans to set a retirement age no higher than age 65. If individual pension plans want to offer monthly benefits at an earlier age they can, but it has to be outlined in the rules within the plan booklet known as the Summary Plan Description (SPD). It is important to note that the plan may reduce monthly benefits that begin prior to age 65 to account for the longer period individuals will receive their benefits. To find out whether your pension plan provides retirement benefits prior to age 65, at a full or reduced amount, you should contact your pension plan to request the SPD.
Unless you and your husband or wife decide to do something different, a company or union pension plan will usually make monthly benefit payments to your husband or wife every month for life. Then, if s/he dies before you, the pension plan will pay you at least half of what s/he was receiving every month for life. This is called a survivor benefit. The pension plan may give you and your husband or wife the option to receive the pension a different way. For instance, it may allow you to give up the survivor benefit in exchange for the plan making higher monthly payments to your husband or wife while s/he is alive. Or, the plan might allow you and your husband or wife to take a large, one-time payment instead of monthly payments for life. If you and your husband or wife decide to receive your benefit in a way that does not provide a survivor benefit, the plan will ask you to sign a form stating that you are giving up your survivor benefit. This is to make sure that your husband or wife does not give up your survivor benefit without your permission. For government employees these rules vary from state to state. You can read our fact sheet on spousal consent in state retirement plans here: Learn more >
My husband or wife was receiving monthly pension benefits and he or she recently died. Can I receive a survivor benefit as the widow or widower?
In many cases, yes. It depends on what your husband or wife elected when he/she retired. Company and union pension plans give retirees the option to receive monthly payments for life, and will then continue to make smaller payments to a retiree’s spouse every month for the rest of his/her life. If your husband or wife selected this option, you should continue to receive monthly benefits worth at least half of what s/he was receiving. If your husband or wife earned benefits under a company or union plan and you did not agree to give up your right to a survivor benefit when he or she retired, you can ask the person running the plan, the plan administrator, to provide you with the paperwork your husband or wife filled out when he or she retired and the form that you signed giving up the survivor benefit. If the signature on the form does not looks as if it is yours, you should contact a pension counseling project or, if there is no project in your area, contact the Pension Rights Center. If your husband or wife worked for a state, city, or county government, you may find that the pension plan rules say that retirees do not have to get the consent of their husbands or wives to give up survivor benefit protections. This allows the retirees to receive higher benefits during their lifetimes. But the benefits stop at their deaths. Note: The rules for retirement savings plans such as 401(k), 403(b), and profit sharing plans are different that the rules for pension plans. You can contact the Pension Rights Center for information about these rules.
My mom or dad was in a pension plan when s/he died. Am I entitled to a benefit from the plan?Most pension plans only provide benefits to retirees and to the widowed husbands or wives of married retirees. They do not provide benefits for children. If your mom or dad was in a retirement savings plan, such as a 401(k) plan, it is possible that your parents agreed to provide a benefit for you. You should check with the person running the plan.