Legal Question in Employment Law in Alabama

Pension

My department has been moved to another state so I have been permanently laid-off. The date of the lay-off is only twelve working days before my 5 year anniversary with the company. I have been offered a severance based on under 5 years of employment & have been told I will not be vested so will not receive my pension. Everyone else who is under 5 years will be getting the same severance as I but due to the fact that I was so close to being vested & thru no fault of mine will not be, I am wondering if there are any pension laws that would address this issue?


Asked on 6/17/04, 9:05 pm

1 Answer from Attorneys
Sterling DeRamus Sterling L. DeRamus, Attorney at Law

Re: Pension

ERISA is the federal law that governs this issue. Under ERISA, a plan must vest 20% per year to the employee. Thus after 4 years, you are entitled to a minimum of 80% of your pension benefits. I suspect that is what the company is doing, but I'm not sure. There also may be some types of pension plans which don't qualify under ERISA, and some checking needs to be done on this. But the general rule is 20%/year. Ask the company about that and see what their response is. There are also all sorts of notification requirements under ERISA that they should be complying with, and often don't. Another point is that any amounts withheld from your paycheck as your contribution to the retirement plan are yours. You don't lose that; it is just the company's portion that vests over the five year period.

Also, I'm confused about where you are: Alabama or Illinois. If Illinois, please check with an attorney in that state as there may be state laws that affect your pension rights as well.

Sterling L. DeRamus

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Answered on 6/18/04, 11:52 am


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