Changes to Retirement Plans

Company and union retirement plans are voluntary. This means that employers are not required to provide a plan. However, once they set up a pension plan or a 401(k), 403(b) or other retirement savings plan, they are required to follow certain rules required by the federal private pension law, the Employee Retirement Security Act, called ERISA. For instance, they have to allow you to earn the right to a retirement benefit after working a certain number of years, provide you with important information about your benefits, and offer a process for you to challenge the denial or miscalculation of your benefits, among other important rights. The rules for government and “church” plans are different and are not discussed here.

With some exceptions, the law generally prohibits retirement plan changes that affect the benefits you’ve already earned. However, changes in plans are permitted going forward. For example, employers and plan trustees may decide to change their retirement plans by reducing the level of benefits that you can earn in the future, or they may freeze the plan for new employees, not allowing them to earn benefits under the plan. Or they may stop a plan or merge two retirement plans. When employers go through a “restructuring” (for example, they buy or sell a division) it is possible that a totally new company could take over a retirement plan and a portion of the benefits you had counted on receiving will not be paid.

Learn more about this issue

Click on the headings below to see more information.

Employers may decide to “derisk” a pension plan.
Companies are allowed to stop their retirement plans at any time.
Companies can freeze their pension plans.
Companies can stop making matching 401(k) contributions.
Companies can change plan rules for the future.
Certain financially troubled plans can change their rules to reduce promised benefits.

Changes to Retirement Plans Highlights:

Fact Sheets and Issue Papers
09/17/15 |Pension Rights Center

Companies that have transferred pensions to insurance companies

Fact Sheets and Issue Papers
09/17/15 |Pension Rights Center

Companies That Have Changed Their Defined Benefit Pension Plans

The Latest on Changes to Retirement Plans:

PRC In the News

Forbes: One Easy Way To Boost Your 401(k) Account, Starting Now

“Participants who withdraw plan funds to cover non-retirement expenses,” notes the Pension Rights Center, “no matter how justified, are shortchanging their future. Every dollar withdrawn will no longer be in the account where it can grow tax deferred. That lost principle, combined with the loss of potential interest and investment gains over what could be […]

PRC In the News
11/20/23|Pensions & Investments

Pensions & Investments: Is renewed interest in DB plans real, or just a pipe dream?

The news around corporate defined benefit plans over the past couple decades has been bleak, with companies expeditiously freezing or terminating plans. But with some help out of Washington, experts say there’s an opportunity for employers to reopen plans still on their books or provide their workers with guaranteed income in retirement.

Blogs & Newsletters

Uptick in Withdrawals Exposes the Inadequacy of Do-It-Yourself Retirement

By David Brandolph For decades, employers have been steadily ridding themselves of the responsibility of funding and making payments to traditional defined benefit pensions in favor of 401(k)-type defined contribution plans. But are these individual account retirement savings plans providing sufficient retirement income for most Americans? For millions of workers, that answer is “No.” A […]

PRC In the News
10/04/23|Investment News

Investment News: Employers racing to offload pensions to insurers

Among companies that still have active defined-benefit plans on their books, 89% are planning to offload their pensions to insurance companies using a strategy called pension risk transfer, which puts workers and retirees into group annuities.

PRC In the News

Bloomberg Law: UAW Aims to Restore Retiree Benefits Given Up in 2008 Crisis

At the center of a historic UAW strike against all three major US automakers is an effort against long odds to reclaim retirement benefits workers conceded decades ago as manufacturers teetered on the brink of collapse. United Auto Worker union activists say they want back the guaranteed lifetime pension payments and retiree medical care they […]

Blogs & Newsletters

PRC urges additional consumer protections when employers unload pension liabilities

Should the U.S. Department of Labor’s (DOL) rules be strengthened to better protect workers and retirees when employers unload their pension responsibilities in so-called “de-risking” transactions? That was the question asked and addressed during an all-day hearing July 18 convened by DOL’s ERISA Advisory Council. Norman Stein, PRC’s Senior Policy and Legal Counsel who testified […]

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