Expert: Allen - 5/13/2005

Question
That's very funny. Two equally vested workers lose their employment within the same window when their  company downsizes its workforce.

The term "early" has no meaning here. The older vested worker is given a pension benefit in return for his separation of employment.

The younger, by a year, older worker gets nothing. $360,000 less than the equally vested older, by a year, worker?




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Followup To
Question -
Are laid-off vested workers, when they reach the age of 50, entitled to the same pension benefits given as an "early" retirement incentive to 50 or older vested workers.



Worker ONE and worker TWO have 24 years of vested service at the age of 50.

Worker ONE turns 50 on or before December 31, 1995.
He accepts a company wide "early" retirement offer.
He will receive amount X per month where X = $2000.

Worker TWO turns 50 in 1996.
He is laid off in December 1994.
Worker TWO is told he can receive a reduced pension at age 55 of about 1/2 X.  About $1000 per month.
Worker TWO is also told he can receive a pension of amount X at the age of 65.

The various scenarios result in staggering inequities of pension distribution.

If worker TWO opts for 55 pension window he will receive $120,000 by the time he reaches 65.

Worker ONE will receive $360,000 in the 15 years till he reaches 65.

If worker TWO waits till he is 65 to receive the full $2000 per month pension he will receive $360,000 less than equally vested worker ONE.Equl
Answer -
Unfortunately this may be possible.

Companies that are looking to downsize will offer special arrangements which give employees who accept early retirement extra benefits. These arrangements are known as early retirement windows and usually only apply to a special group of employees and are only in effect for a short period of time.

The special increase in benefits must meet certain requirements of the law. They can not be given only to high paid employees - they must be offered to a group that includes both high paid and others.

Unfortunately some of your former coworkers lucked out and received an increase in their benefit. It's unfair but if the company did it properly, it met the requirements of the law.

Answer
I wasn't trying to be funny. I was just telling you the law.
I can understand why you are upset. But I don't believe you can do anything about it.
If you want to try, there are three alternatives available to you:
1. Go to the human resources department of the company and discuss with them. This will probably be fruitless, but it might be worth a try.
2. Go to the local office of the U.S. Government Dept. of Labor EBSA Division (I believe it stands for Employee Benefits Security Administration). They may be able to help you.
3. Hire a lawyer - I wouldn't do this because I believe the company could do what they did and you would probably be throwing out money. But it's your call. If you go this route make certain you go to an attorney who works with ERISA and/or employment law issues.