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Aging
Internet Information Notes
Pension Benefits
The Social Security Administration defines pensions as “private
pensions and annuities, government employment pensions, Railroad
Retirement, and individual retirement account, Keogh, and 401(k)
payments.” Private pensions have been the cornerstone of
retirement planning for working adults For much of the past century.
In 1974 Congress passed the Employment Retirement Income Security
Act to protect individuals from pension programs which are abolished
by companies that go out of business, into bankruptcy, or are
bought-out by other companies. The Act creates protection for
defined pension benefit programs – programs where participants
are guaranteed a set income after retirement depending on age
and years of service.
The decline in defined benefit plans roughly parallels growth
in individual retirement accounts established by companies for
employees. Unlike defined benefit plans that hold employers accountable
for results, defined contribution plans, known as Section 401
(k) plans, hold the employee responsible for making investment
decisions. The portability of individual pension plans offsets
some of the risk of losing calculated benefits of defined benefit
plans when employees leave a company before drawing a pension.
Other risks of defined benefit pensions include the bankruptcy
of companies, changes in benefits as a result of business mergers
and mismanagement of retirement funds by businesses, unions and
other organizations. As a result of legislation to protect workers,
several government agencies and programs have evolved to counsel
and protect workers, annuitants and survivors from these errors.
The links below focus mainly on the issues, programs, and research
surrounding the protection of private pension benefits.
Download Note:
See Also:
Center for Communication and Consumer Services
U.S. Administration on Aging
Tel. 202-619-0724
FAX 202-357-3523
Internet: http://www.aoa.gov
Email [aoainfo@aoa.gov]
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Dept. of Health & Human Services
