Today’s economy has people worried about what the future holds. Concepts like retirement accounts and pensions are not what they used to be. Instead of spending your time worrying, keeping a close eye on your pension and staying on the lookout for warning signs can give you the peace of mind you need. If things begin to take a downturn and you find yourself short on cash, check out http://www.moneysupermarket.com/loans/ to get you through the difficult times.
Warning Signs
While things can take an unexpected turn for the worse, there are things that you can look for to give you a heads up about an impending negative situation. As a savvy consumer, you want to keep your hand on the pulse of anything that affects your finances and your future retirement plans.
What if your employer isn’t doing well? Even if you are thinking that everything is going well with your pension, you can still face problems if your employer is having problems. An employer that is seeing consistent losses or runs the risk of loss could see the pension as something to help out the bottom line. An employer can freeze pensions until things are once again, back on track. In the meantime, this leaves you out in the cold.
Lump payouts can also be a negative. If your current pension gives people the choice of a lump sum payout as opposed to payments over time, there could be trouble in the future. If the account is not maintaining a certain account balance, the percentage you receive at the time of payout could be less than what you expect.
Sometimes, when companies are taken over, pensions suffer. These funds are no longer guaranteed if someone else is running the show or the company ends up in bankruptcy. While it doesn’t happen every day, you can also lose some or all of your pension if your company makes a transition. This includes moving towards a religious affiliation and changing over to a ‘church plan’ as opposed to a more traditional pension.
How to Protect Your Pension
Ask for an annual report. If you are participating in a private plan, you are legally obliged to get an annual funding notice. Look over the numbers. A healthy account should have a funding ration of 80% or higher. This means that, at the very least, the account is healthy. You also have the right to request a more detailed report that gives you more information about the plan and its conditions.
Get a statement about your vested retirement benefits. You need to know what you are entitled to receive when you are ready to retire. Plans are legally required to provide you with these benefits. Waiting until after you retire to get this information could make planning more difficult. This is information that you need today. Private plans are insured through the Pension Benefit Guaranty Corp.
If you are a public employee with a pension that does not have insurance, it is important to make sure that you have as much information as possible. Many experts say that if you are currently in the workforce, you have a better chance of receiving the pension you are due. Those just starting out have a higher risk of missing out on pension and retirement benefits.
