You've finally made it to retirement and soon you'll be receiving a monthly check. Or a lump sum.
But how do you know the check will be for the right amount? Big companies do make mistakes.
Sometimes it's the input into the computer program that can cause an error in your pension check. Other times, it's an error in work periods, or maybe contributions were wrongly credited. A small error every month can lead to a big mistake in computing your benefits.
Consider a Chicago area woman who was entitled by a divorce decree to a portion of her ex-husband's profit-sharing account. The employer sent her a check, but for thousands of dollars less than she was entitled to.
Who could have figured out the complicated formulas used to determine the proper lump-sum distribution? Deliberate or not, the error could have cost her plenty.
The "pension and profit-sharing detectives" of the National Center for Retirement Benefits go through the mountains of pension-plan paper work to make sure you're getting the correct benefits. The founders are attorney Allen Engerman and CPA Paul Holzman, a former IRS pension agent. They estimate that half of the more than 60 million Americans covered by retirement plans are victimized by bad plan administration.
Of course, your first question is, how do they get paid? The fee is 50 percent of the additional money they collect for you. If your monthly or lump-sum check doesn't increase, they don't get paid for their investigation. There are no upfront costs or expenses paid to use the service.
If they find you're owed only a few extra dollars a month, they'll charge a one-time payment based on the discounted value of their findings over the years ahead. The big money comes when they find a huge error in a lump-sum distribution-or when they find that dozens or hundreds of employees are subject to the same small error in payments.
Common errors. What kind of errors do they expect to find? They have a long list of common errors. They include:
The paper trail. How do they find errors if you can't? The federal rules and regulations for pension and profit-sharing plans create a huge paper trail.
NCRB specializes in reviewing the formulas for contributions, the investment patterns of the fund and the proper levels of eligibility, and in making sure the correct computer math is applied to the contributions. Some sources of information include benefits statements, investment records and copies of plan annual reports, which must be filed with the IRS and Department of Labor.
Should everyone be suspicious of the company benefits plan? Maybe not, if your company is using one of the larger plan-management custodians. But it's worth checking.
Engerman notes that if your employer is having financial trouble, the pension and profit-sharing money can be a tempting target. Also, frequent changes in plan administrators or difficult-to-get or late information may signal that the plan is not well-managed.
Not too late. Is it too late to review your pension settlement if you've already taken a lump sum, or even years of monthly distributions? No, says NCRB. The plan obligation is ongoing, and it certainly could be worthwhile to review amounts already received. But there is a six-year statute of limitations, so get started.
Engerman and Holzman aren't out to challenge all pension-fund accounting. They say they are out to provide competent analysis of benefits to people who would be otherwise "stuck" with the determinations of the company's pension-plan accountants. But they figure there's enough business out there-and remember, they don't get paid until they find errors-that they've expanded nationwide.
Unfortunately, their services cover only corporate pension and profit-sharing accounts, and not union or governmental units.
For more information and a brochure describing the 30 most common and costly errors made in plan distributions, you can call the National Center for Retirement Benefits at 800-666-1000.
About the author: Terry Savage is a registered investment adviser for both stocks and commodities and is on the board of directors of McDonald's Corp. and Carter Hawley Hale Inc. Her second book, published by HarperCollins, is Terry Savage's New Money Strategies for the Œ90s. Ms. Savage can be reached by E-mail at email@example.com.
Excerpted with permission of Chicago Sun-Times Feature Syndicate.
If you are an adventuresome type and don't mind wading through mounds of documents, you can check your payout yourself by contacting the Pension Rights Center, 918 16th Street, NW, Suite 704, Washington, DC 20006; 202-296-3776. Their booklet, "Where to Look for Help with a Pension Problem," costs $8.50.