Help wanted: Union can suspend pension
DEAR CARRIE: For 23 years I worked in a hospital as an X-ray technician. I belonged to a union and became vested in the union-sponsored defined-benefit pension plan. Before I left that job a few years ago, the union told me that when I was ready to retire, I should contact the office to get the paperwork started. I now work in a doctor's office as an X-ray tech. And since I'm 62 I would like to begin receiving my union pension next year. I went online to look at an application and discovered wording that shocked me. The application says that to start receiving the pension I would have to agree not to work in a related field for more than 40 hours a month until after age 70 1/2. I want to continue working in the doctor's office. Can the union legally place such restrictions on my pension? -- Legal Limits?
DEAR LEGAL: The restrictions sound legal.
"Under certain circumstances, federal pension law allows pension benefit payments to be suspended and permanently withheld if an employee continues to work beyond normal retirement age," said the U.S. Labor Department.
The restrictions you describe are associated with a multi-employer pension plan, or a plan that covers employees of more than one company.
"In the case of a multi-employer plan, in general and subject to other conditions, benefit payments may legally be suspended when, after normal retirement age an employee continues to work or resumes working 40 or more hours per month in the same industry, trade or craft, and geographic area in which he or she, and/or other employees covered under the plan, previously worked while they were covered by the plan. Suspension may also occur in some cases if the employee receives payment for such work on each of eight or more days in a month."
Not all pension plans have benefit-suspension provisions, the department points out. And some companies have more restrictions than others. That's why participants should read their plan document carefully to see what they are up against.
Companies don't even have to offer pensions, but when they do the programs are subject to the Employee Retirement Income Security Act. The department enforces those laws, which establish private-sector participants' rights and plan administrators' fiduciary duties.
Speaking of rights and responsibilities regarding a suspension, here are some:
"Only the portion of a pension benefit that is attributable to employer contributions, not employee contributions, can be suspended," the department says. And "payments must commence after the re-employment ends."
The plan must notify the participant of the suspension during the first calendar month or payroll period in which benefit payments are withheld, the department says.
If a plan has benefit-suspension provisions, the policy should be described in the "summary plan description," which ERISA-covered pension plans generally must furnish to all participants when they join the plan and periodically after that, the department said. The plan must also have procedures that participants can use to request in advance which type of re-employment would result in a suspension of benefit payments.
"If a participant is notified that the plan intends to suspend payment of benefits, the participant can ask for a review of that decision, which may be under the plan's internal claims procedure for other benefit denials," the department said.