Pensions are less common today than they once were, but many workers continue to pay into pension plans with their employers in an effort to prepare for retirement. Pensions are not like other retirement plans that you may be familiar with that can be rolled over or converted into other retirement plans when you leave the company and seek employment elsewhere. The employer retains control over the pension, but you may still be entitled to receive the pension benefits when you retire. If you leave your job, you understandably want to retain rights to your pension and claim the funds when the time comes to do so. You may even be relying on access to those funds in retirement. If you paid into a pension in a previous job, there are a few steps that you can take to ensure that you get paid all of the funds that you are entitled to and that you may be relying on in your retirement years.
Check the Vesting Schedule
Most pensions have a vesting schedule. This means that you may have had to work at the job for a certain length of time to claim the pension benefits. For some companies, you may be fully vested after two years. For other companies, you may only be 75 percent vested after five years. If you are only 75 percent vested, this means that you only qualify for three-quarters of the funds in your account. Still other companies have an all or none vesting plan that you may not qualify for unless you work at the job for many years and contribute to the pension fund regularly regardless of the amount of money in your pension fund. It is important for you to review your previous job’s employment and benefits paperwork to analyze the vesting schedule that you agreed to when your term of employment began. Some people may be dismayed to learn that they did not work at the company long enough to qualify for any pension benefits at all.
Keep Track of Your Benefits
It is easy to lose track of your pension benefits over the years, but this can be detrimental to your personal finances in the later years of your life. When you initially leave a job, ask the human resources or benefits administrator for information about your pension and how much of the money you qualify for. Ensure that you keep your previous employer updated with your contact information each time that you move. The pension administrator should always be able to contact you with updates regarding your pension benefits. It is wise to track your pension benefits with your other assets and your retirement planning efforts over the years leading up to your retirement date. In most cases, you can track your benefits online on a regular basis when you review your other asset balances or pay your bills.
Apply Through Your Previous Employer When You Retire
In most cases, you will not simply start receiving pension payments when you reach retirement age. You typically will need to apply through your previous employer for access to the benefits. In the weeks leading up to your retirement date, request information about the benefits application process. As soon as you qualify for the benefits, follow the application procedures so that you can begin receiving pension payments as soon as possible.
Many workers who qualify for pension payments from a previous employer paid into the fund for years. These are funds that are rightfully yours and that you do not want to leave sitting on the table. They may be needed for retirement, or they may simply enhance your lifestyle during this stage of your life. Regardless of how you plan to use the funds, ensure that you understand the vesting schedule and how it affects the benefits you may qualify for. Always keep track of the benefits payments to ensure that you apply the right figures to your retirement planning efforts, and ensure that you follow the application procedures properly when you qualify for pension payments. By taking these important steps, you can rest assured that you will not lose track of valuable retirement funds that you are entitled to.
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