My Pension is Frozen! Now What?

Recently, I received a question on a public forum that I thought was interesting.  In fact, because of public misperception and media coverage - it certainly sounds far worse than it is. 

Here was the question:

I am 53 with SSDI permanently disabled. I have a pension from a former employer. I was told I have to be 55 to get pension. Unfortunately, the company has frozen all pensions as a choice to save money. Is there any way I can get my pension now?

Wow!  Sounds awful, right?  If a company goes bankrupt of fallson hard times - and has to freeze their pension - do all the employees lose ther pensions?

No, not at all - despite what energetic, Pulitzer-hunting journalists might want you to think!

You see, the term "frozen pension" sounds quite scary.  However, it is not really as scary as it sounds - especially since you indicated that you were fully vested.

When a company falls on hard times or decides to save money - they can change everything that they do or provide in benefits from that point FORWARD.  However, they cannot take away benefits, pensions, or retirement savings that an employee has already EARNED and is fully vested in.  This is but one of the protections that the set of laws known as ERISA (Employee Retirement Income Security Act) grants.

Basically - in exchange for tax deductions that a company gets for putting money away into pension plans and other benefits - the government requires a certain amount of security for the employees.  So - you are good, you can stop worrying.

Here is a great article that explains pension freezes and the different types of freezes that typically occur:

http://www.pensionrights.org/publications/fact-sheet/pension-freezes

Best of luck to you all!

Jon