Forbes: What about people at small and midsized companies, are they in the clear?
Schultz: Oh, they have to worry. Especially when you get down to smaller companies, there's more temptation at that level for the plan to be managed more as a tax shelter. You obviously want to make sure the plan has filed the correct documents with the IRS, and you want to make sure it's being funded adequately. The only surefire way is to look at something called a 5500 form. The downside is you can only get it when it's a year and a half out of date. Your company might be starving the pension, and you won't know until it's a bit late in the game. You can get these online at a website called FreeERISA.com (registration required). Look up your company's 5500, which will show the assets and the liabilities.
You can also get an idea of how much pension the company owes by looking at the 10(k), the SEC filings available at sec.gov. They'll mention the pension obligations and how much money is in the plan. But it's important to understand that they might look underfunded when in fact they're well-funded, because the figures usually include executive benefits, which aren't funded.
Forbes: What about government employees, or teachers, cops and firemen?
Schultz: There's been a bit of hysteria over the public plans. For the most part, the benefits aren't as rich as they've been characterized. Most are fairly realistic, and the numbers sometimes look larger than they really are because they include automatic forced retirement savings, for example. The bottom line is that, with some well-publicized exceptions, a lot of these plans aren't as generous people think they are and aren't as underfunded as people think they are.
It's unlikely that public employees will be forced to forfeit what they've earned, so if a person's earned $2,000 a month in retirement, that's probably not going to be taken away. But they may see their benefits reduced going forward. There will also be a big push to curtail retiree health benefits, so both public and private employees need to be saving extra for that. There are a lot of things you can't count on anymore.
Forbes: If someone has a question about their pension, who can they call?
Schultz:The Pension Rights Center in Washington can refer people to a lot of resources. There really aren't too many others that a person could go to. If they're in a union, their union really ought to be on the ball and be able to tell them how healthy their plan is and explain the benefits. There are also some nascent groups including the National Retiree Legislative Network, a fairly new group of people who are mostly retired salaried managers and employees who banded together to compare notes, share concerns and lobby their congressmen to tighten some of these rules and protect them better.
Forbes: If your pension has been cut and you don't have enough money to retire, what can you do?
Schultz: Well, you'll probably have to continue working longer. You'll have to save more, which will be difficult. Contrary to popular perception, salaries tend to not rise after the 40s, when adjusted for inflation. It's difficult, especially if you end up losing your job. You could be in quite a tight spot. What I have seen in a lot of these cases is that people end up selling their homes. Really, the only safety blanket that you have is Social Security, which is also under assault. The same retirement industry that dismantled pensions would love to dismantle that program and have a crack at the assets.
