In the old days employers used to provide welfare benefit to any employees who got into difficulty and some of the retirement plans were remarkably generous. Those were the compassionate times when employers recognized the levels of pay were low and prevented the employees from saving for their retirement. Indeed, this practice actually hung on through the decades and new laws were required as recently as the Employee Retirement Income Security Act of 1974. This deals with the management of the retirement funds established over the years. All employees pay a small percentage of their pay into the fund and it tops up the pension when they retire and leaves enough to cover funeral expenses.
While the country remain in the grip of these socialists, everyone saw good returns from these retirement funds. Even though there were minor recessions and more serious depressions, these funds were solid, steady performers. During the boom years, they grew spectacularly. And that’s when the problems began. The owners of these businesses began to question why so much cash was being left sitting around doing nothing. With the economy doing well, many of these funds were therefore used to fund dramatic expansions of the businesses. The owners always meant to pay the money back except, this was a cheaper source of funding than using the banks. Repayments were therefore delayed.
When they looked at the retirement plans, many owners discovered the plans could be amended without having to ask for permission from anyone. This came as a surprise to many who had retired. They began receiving notices regretting the reduction in their benefits. A recent case against Qwest Communications International has just been decided by the Court of Appeals. The employers won. So the moral of this story for you is a simple one. If your employer currently offers you a pay package including insurance and retirement benefits, look at the small print very carefully. If you see anything along the following lines, “the Company reserves the right to amend or terminate any of the benefits under this section. . .”, don’t rely on the plans and policies apparently on offer. The courts are not going to protect the rights of an employee against an employer in the face of an express contract term.
The life insurance policy you buy, whether directly or through an agent, is a contract made for life. So long as you continue paying the premium installments and don’t cancel, that policy is good for decades. But no matter what the appearances, including the appointment of well-known individuals as trustees to administer the fund, no employer who reserves the right to amend or terminate the plans can be relied on to leave the fund untouched. If this applies to you, you should seriously consider topping up the coverage apparently available. Discuss your options with an experienced life insurance agent and find out how best to protect your retirement prospects and the welfare of your family.