Uncovering Hidden Benefits: How AI Legalese Decoder Can Help You Navigate a “Secret” Pension
- April 9, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Situation Analysis:
My employer has been informing staff for over a decade that there is no pension available, claiming that only certain individuals who were “grandfathered” in are eligible, and those hired after 2010 do not qualify. However, upon reviewing the Union negotiated contract, I discovered that the pension provision is still in place. The Union also acknowledges that the company should have been upholding our pension benefits all along and questioned why employees did not raise concerns earlier. As a result, employees have been maximizing contributions to their 401(k) plans without any matching from the company. Surprisingly, some long-serving employees believed that a 401(k) was preferable to a pension, leading to missed opportunities for retirement savings.
## Concerns and Uncertainties:
In a recent development, the individual who spread misinformation about the pension scheme at work has been promoted to a managerial position. This raises further questions about the accuracy of the information provided and the implications of this misinformation. It is unclear what legal violations may have occurred in this situation, particularly in the state of Michigan.
## AI Legalese Decoder:
The AI Legalese Decoder can help in this scenario by analyzing the Union negotiated contract and relevant legal provisions to determine the rights and obligations regarding pension benefits. It can assist in deciphering complex legal language and identifying any potential violations or discrepancies in the information provided by the employer. Additionally, the AI Legalese Decoder can offer guidance on the appropriate steps to take in addressing the issue and seeking resolution, including potential legal remedies available to safeguard employee rights. By leveraging this technology, individuals can gain a better understanding of their legal standing and take informed actions to protect their interests.
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AI Legalese Decoder: Simplifying Legal Jargon
Introduction:
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So one person was saying something wrong about the union contract, and nobody checked for 14 years? I’m genuinely having a hard time understanding what happened here.
You collectively need to bring this up with the union and get their lawyers involved. If it’s in the contract then there likely are penalties to the employer for violating the contract, but that will all need to sorted through the union
Not your lawyer but your union should also be concerned about catching a duty of fair representation claim.
This is very much you need to get an attorney territory and not asking anything on Reddit!
Management might be right and there’s no pension. This might be national news where the company goes bankrupt because it has to assume the liability of tens of millions of dollars from the underfunded pension plan. … Who’s to say really…
Go to the Michigan State bar association, speak with a lawyer about the contract and if your union failed in any of its duties.
Go to your union rep first. If you don’t know who that is, call the local union office. That’s the starting point. The union exists for a reason. Generally, they’ll investigate and either: educate the member if they’re wrong, or try to resolve with management.
In this extreme case, a grievance would likely be filed and eventually go to arbitration, if you have the correct interpretation of the contract terms.
After all that, if you don’t get the answer that satisfies you, then you should reach out to a labor and employment law lawyer.
>Sadly some senior employees had the impression a 401k was superior to a pension!
More a topic for one of the finance subs but I’ll bite. Unions for some reason are obsessed with this idea that pensions are a great deal without their members having any clue on how they work – and they do it intentionally.
Defined benefit pensions are basically non-existent these days in most of the private sector – these are pensions that are along the lines of “we will pay you x% of your salary when you retire”. They are great deals when you can find but generally are government jobs. The more years you work, the more of your salary you will get in retirement regardless how the markets do. DB plans have been generally replaced by defined contribution pension plans.
DC plans usually have two components to their contributions: employer payments and employee payments which is near identical to how 401ks and IRAs are structured. Both DC plans and 401ks ultimately think of their balances as a dollar amount (little more complicated than that). The fundamental difference between DC plans and 401ks are who is in control of investing your retirement money. 401ks you the employee have discretion over how the money is invested versus DC plans are managed by your local’s pension company, more on this later. DC plans tend to push retirees on one of their annuity options where they will guarantee a certain payment every month with certain survivorship options. Annuities give safety at the cost of market gains – they have a place in financial planning.
let’s talk about pension companies used by these locals because this feels scummy to me. they are legitimate companies whose only role is to manage the pension funds for that local – 70% finance related, 30% admin related, yet often are comprised of multiple ex-union leaders with 6 figure salaries. in my father-in-law’s case, his union’s pension company has 8 ex-union leaders on the payroll each with 150k+ a year salaries – none of them have any business in the world of investment management, so they generally outsource that to consultants (they are not cheap) to manage it for them. these consultants will offer various investment strategies but in order to offset the high (wasteful) expenses, often end up going down LLP and private fund routes which have high fees, high risk, and the potential for high rewards. Obviously they are not all terrible nor do they all love private equity and other black box investing but much of it is intentionally opaque to the union member – someone is managing your retirement and telling me how great its doing, yay!- they are just burring piles of union members money, paying themselves to do it, and effectively saying they can do it better than the professionals while contracting the work out to the “professionals”. just seems wasteful to me.
401ks and IRAs can be used to purchase an annuity just like DC plans push you to do. it’s unlikely you’ll find materials saying one is better than the other. What I will say is, annuities are TERRIBLE for passing wealth between generations. They give you a known income for an unknown amount of time – once you die (+ spouse, if you did a survivorship one) there is nothing for kids/grandkids. Die 2 weeks after starting your annuity? too bad, all the money is gone now (assuming no survivorship) – the same is not true for 401ks/IRAs but with the added risk of unknown income for unknown time. Given the same fees/expenses and market returns, a 401k/IRA and DC plan will have the same ending account value – the problem is, DC plans have outsized expenses compares with standard fees for investing in etfs/mutual funds. Either way, it’s not an easy comparison because you are comparing very different risk profiles/goals – i personally dont feel like annuities are a great idea for the 90% of people they are sold to.
My father, father-in-law, and uncles-in-law x3 have retired from their respective unions.
You should talk to your union rep about this before talking to management or HR. If your union isn’t helpful, then it may be time to talk to your fellow union members about a possible new union president (worked at my last job at getting them to do something).
Where, exactly, has your union been for the past how many years!? Time for new union leadership and a “tough” decision looming for your employer. Ain’t no way they can just ignore your contract.
Are you sure the contract you saw is the current one?
If it has been superseded, that would explain everything except “the union agrees.” It’s not clear who from “the union” agrees, but if they’re not on top of things anyway, they could also be wrong.
NAL; but I am a Union member. This is definitely territory to get the Union rep involved and make sure they follow up. Unions hire lawyers for these types of reasons.
My only follow I didn’t see posted would be to look around and make sure you’re not going to lose your employment. What I mean is this; if the Union contract stated that the employer was required to contribute to the pension fund regularly for the last 14 years and they failed to do so, it virtually guarantees an IRS audit. If the employer “can’t” afford to pay that back and/or penalties, they might just fold.
I always tell my coworkers when they talk about the union “we are the union ” meaning, the union is only as strong as we are. Always learn the contract.
You should contact the division of the Department of Labor that enforces ERISA. It’s called the Employee Benefit Security Administration. EBSA for short. Someone else mentioned PBGC but they essentially function as an insurance company for underfunded defined benefit plans. I do not know if they have an enforcement arm. DOL definitely does and will likely be very interested.
It is possible that the plan has been frozen to new participants. Before doing what I said above call HR and get a copy of the Summary Plan Document or the entire Plan Document if possible. Check in the preamble of the document or the eligibility section to see if the plan has been frozen to new participants. There should be language there that states that.
If the plan was not frozen and eligible employees are not put into the plan correctly and receiving benefits they have a big problem on their hands. In addition to DOL, the IRS would be interested as well. TE/GE Employee Plans has an examination division that audits pension plans and would force the company to retroactively make those employees participants and have them accrue benefits. If the company was unwilling to do that the IRS would likely strip the qualified status of the plan which would result in a potentially substantial tax bill for the employer.
Good luck.
Take a look at the US Gverment’s Pension Benefit Guarantee Corporation website.[www.pbgc.gov](https://www.pbgc.gov)
I am a lawyer, not yours. Pensions, after vesting, are not just governed by union contracts, they are protected by ERISA, Employee Retirement Income Security Act.
It is beyond me how your union that takes your dues would not protect you by providing competent legal counsel. This is unbelievable.
Contact the Union if it is in the contract they will lawyer up and rectify it.
401k is better than pension tho… Anyways your union should have lawyers, get them involved.
401k vs pension is a mixed bag… If you die before you can take a pension you get nothing.
OP your best bet is NOT to go to your local union steward or chairperson, but go directly to regional or national union leadership. Odds are that local union representation is negligent and/or incompetent. Bring the house down on your local union and your management. Watch the union resignations fly in and management run to attorneys if your claim is verifiably correct.
I would have to see the contracts on this holy shit
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