Hello and thank you for your question.
The answer to your question depends on the "break in service" rules as
applicable under your employer's plan, and as required by the federal
pension law as set forth in ERISA (the Employee Retirement Income
Security Act of 1974).
As far as ERISA protections go, once you've been away from your
employer for 5 years, your entitlement for credit for prior service is
extinguished. Here's how the US Department of Labor sees it:
"What Happens To Your Service Credit If You Leave Your Job And Later
Return?
A break in service can have serious consequences for your pension if
it extends for a long enough time and your pension benefit is not yet
fully vested. However, ERISA does not permit your accrued benefit to
be forfeited if you have a short break in service. ERISA establishes
rules governing the circumstances under which a plan is required to
continue to credit a participant with service earned before a break in
service if the participant later returns to employment. These rules
are very technical, but in general guarantee your service credit
cannot be forfeited for absences shorter than 5 consecutive years."
What You Should Know About Your Pension Rights
http://www.dol.gov/pwba/Publications/wyskapr.html
In other words:
"Before the ERISA law was passed, workers who left the labor force
lost credit for all vesting time credited for previous work. Today,
you will have a break in service if you do not complete at least 501
hours of work with your employer in one year. If you are vested, even
partially under a graduated vesting schedule and return to your job,
you must be given credit for prior service, regardless of how long the
break lasts. If you are un-vested (not vested) and stay away from a
job for five consecutive years, you may lose all the years you have
toward vesting under the plan, even if you return to the same
employer. By law, your employer cannot consider a one-year maternity
leave as a break in service."
Making the Most of Your Pension Plan
http://www.urbanext.uiuc.edu/ww1/09-07.html
So your only hope of getting credit for your prior service is if your
employer's plan is a lot more generous than ERISA requires.
You will need take a look at your plan document (or at least, the
summary plan description which your employer is required by law to
provide to you). And you should check your plan provisions as they
existed before the 1974 effective date a ERISA and also as they exist
today.
The reason you want to examine your pre-1974 plan document is that
ERISA has a special rule for pre-1974 plans, the effect of which is to
prohibit the employer from repealing plan provisions that are more
favorable than those that ERISA imposed:
"(2) No pension plan to which section 203 applies may make effective
any plan amendment with respect to breaks in service (which amendment
is made or becomes effective after January 1, 1974, and before the
date on which section 203 first becomes effective with respect to such
plan) if such amendment provides that the nonforfeitable benefit
derived from employer contributions to which any employee would be
entitled is less than the lesser of the nonforfeitable benefit derived
from employer contributions to which he would be entitled under-
(A) the break in service rules of section 202(b)(3), or
(B) the plan as in effect on January 1, 1974."
ERISA Section 211
http://www.planparticipant.org/ERISA/ERISA_ACT_SEC_211.htm
Frankly, because the 5-year rule is pretty much the standard for
breaks in service, it is unlikely that you will find a provision in
your employer's plan that will give you credit for prior service. But
it's at least worth checking.
This gives you a bit of a negotiating point, but they cannot
administer the plan contrary to its terms even if they'd like to. So
in effect you would have to ask for more salary now as a means to
compensate you for what you lost in the 1977 layoff.
Search terms used:
"break in service rules" pension
erisa break service
erisa "consecutive years" break service -multiemployer
erisa break 202(b)
May I sugggest that you obtain the plan document and/or summary plan
description and tell me what it says about vesting and breaks in
service (you can do that by posting it here as a request for
clarification of answer). I'll be happy to interpret it for you in as
a clarification of this answer.
I would appreciate it if you would hold off on rating my answer until
I have an opportunity to reply.
Thanks again for giving me the opportunity to work with you on this
question
Sincerely
richard-ga |
Clarification of Answer by
richard-ga
on
29 Jan 2003 07:06 PST
Hello again:
I doubt that your employer's pre-1974 plan would have had a
break-in-service rule that would protect you during the 25 years you
have been away, so I don't think you're losing anything by being
unable to locate the old plan.
In answer to the question raised in your comment, current law vesting
minimums are as follows (the employer can always be more generous):
Employee contributions are immediately 100% vested.
Employer contributions must vest 100% when you attain normal
retirement age (so if it's an age 65 plan then because you're age 60
you have no more than 5 years to go no matter what the plan says).
Besides that, benefits must vest under one of two schedules (plans
other than 401(k) Plans or 'Top-Heavy' Plans have one pair of
alternate schedules; 401(k) Plans and 'Top-Heavy' Plans have a
different pair):
--Plans Other Than 401(k) Plans or 'Top-Heavy' Plans--
Year 1 0%
Year 2 0%
Year 3 0%
Year 4 0%
Year 5 100%
or
Year 1 0%
Year 2 0%
Year 3 20%
Year 4 40%
Year 5 60%
Year 6 80%
Year 7 100%
--Section 401(k) or 'Top-Heavy' Plans--
Year 1 0%
Year 2 0%
Year 3 100%
or
Year 1 0%
Year 2 20%
Year 3 40%
Year 4 60%
Year 5 80%
Year 6 100%
[The source for the above is Internal Revenue Code Sections 411(a),
416(b)]
By the way, it's lucky I noticed your question in the comments
section. If you need anything more, please use the "request answer
clarification" button instead--Google Answers will send me an email
that you're looking for me. And of course it wasn't I who gave you
that Canadian law answer--it came in a comment from a person who is
not a Google Answers Researcher
Google Answers Researcher
richard-ga
|