It’s no secret that retirement and pension plans have come under increased scrutiny in recent years, amidst allegations that benefits are often miscalculated and underpaid. Here’s a checklist to help you avoid some of the most common plan mistakes:
- Check your plan documents to determine the types of covered compensation. Be sure all relevant pay such as commissions, overtime, and bonuses are included when calculating benefits.
- All appropriate years of service should be part of the computation, including (if the plan requires it) years of service the employee may have worked in different divisions.
- Use the correct benefit formula, including an accurate interest rate.
- Confirm whether you’re using correct Social Security data.
- Verify employees’ birth dates.
- If your company has been through a merger or similar transition, check that there’s no confusion regarding which pension benefits an employee qualifies for.
- Ensure that assets in each employee account are properly valued.
- Make all required contributions to pension funds on time.
- Double-check your calculations because basic arithmetic mistakes are common.
- Remind employees to promptly provide you with information on any changes in their status, because inaccurate data can affect benefit calculations.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
Compliance Assistance for Retirement Plans U.S. Dept. of Labor, Employee Benefits Security Administration