It\u2019s a nightmare scenario: Your pension payments aren\u2019t coming through, and you\u2019re worried you won\u2019t be able to pay your bills.<\/p>\n
That\u2019s reportedly the reality for nearly 300 Houston city workers who took early retirement this past spring, but still haven\u2019t received any pension payments.<\/p>\n<\/p>\n
Months have now passed, and some former city employees told ABC13 that although they were told it would take 30 to 60 days to start receiving their money, it hasn\u2019t shown up.<\/p>\n
According to ABC13, the City of Houston made early retirement buyout offers to about 3,000 workers as a cost-saving measure amid a projected budget shortfall. The city told the outlet that about 1,000 employees accepted the package in April [1].<\/p>\n
The retirees are members of Houston Municipal Employees Pension System (HMEPS), which is a public sector defined benefit pension plan. HMEPS disperses retirement, disability and survivor benefits for city employees [2].<\/p>\n
According to local news outlet KHOU 11 News, HMEPS board chair Sherry Mose said the pension organization normally receives an average of 39 retirements per month, making their current caseload much heavier than usual.<\/p>\n
Mose said timing was the reason the nearly 300 workers reported never receiving their checks, and that some had not submitted the correct paperwork. She said they brought on additional staff to work on the issue, and the pensioners would receive payments by the end of September [3].<\/p>\n
A defined benefit pension plan is funded by contributions from the employer. This type of pension is becoming less common<\/a> than defined contribution plans, which cost less for employers.<\/p>\n Employees generally have to work a set amount of time, known as a vesting period, to qualify for a defined benefit plan. The plans typically issue set payments to workers upon retirement, until the plan holder dies.<\/p>\n IRS rules stipulate that benefits can\u2019t be decreased retroactively by an employer [4]. But there can be risks to defined-benefit plans \u2014 namely, if an employer becomes insolvent and the plan does not have the assets to cover benefits.<\/p>\n Story Continues <\/p>\n There is a federal Pension Benefit Guaranty Corporation (PBGC) that insures these plans \u2014 but federal, state, and local government pensions are not covered by PBGC [5].<\/p>\n Read more: Here are 5 simple ways to grow rich with real estate<\/a> \u2014 whether you have $10 or $100,000 to invest<\/p>\n Houstonians\u2019 public outcry and calls to both city officials and the pension fund may have helped get this issue enough attention to spark action.<\/p>\n Per KHOU 11 News, the HMEPS board chair told city council her office received more than 13,000 calls about the issue. Council members said constituents questioned them in public about the problem.<\/p>\n HMEPS said the retired Houston workers were not being paid because of processing issues. But what if your defined benefit plan is not making payments because your employer can\u2019t afford it?<\/p>\n State laws vary when it comes to employees\u2019 rights if a state, local or municipal government pension is not adequately funded to make promised payments to the plan\u2019s participants.<\/p>\n Some states have laws that explicitly say that making pension payments is a contractual obligation for state and local plans. Other states lack such protections, but do have case law that could be used to argue for pensioners\u2019 rights. And at the other end of the spectrum, in some states, workers do not have contractual rights when it comes to pensions.<\/p>\n The National Conference on Public Employee Retirement Systems has published a breakdown of the protections for public sector pension plans in each state [6].<\/p>\n If you are having other issues getting paid by your pension plan, there are resources to help.<\/p>\n The U.S. Administration for Community Living\u2019s Pension Counseling and Information Program is available in 31 states. It can help with administrative appeals, location of pension plans that have been \u201clost\u201d in the event of company merger or closure, complex pension questions, and referrals to other professionals who can help [7].<\/p>\n If you\u2019re not in a state covered by this program, you can seek help from the Pension Rights Center, a consumer watchdog group that maintains a website offering resources, information and referral for common pension issues [8].<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n At Moneywise, we consider it our responsibility to produce accurate and trustworthy content people can rely on to inform their financial decisions. We rely on vetted sources such as government data, financial records and expert interviews and highlight credible third-party reporting when appropriate. We are committed to transparency and accountability, correcting errors openly and adhering to the best practices of the journalism industry. For more details, see our editorial ethics and guidelines<\/a>.<\/p>\n [1]. ABC13<\/a>. \u201c’Give me my money:’ City of Houston retirees demand their pension payouts months after city deal\u201d<\/p>\n [2]. HMEPS<\/a>. \u201cWho we are and what we are about\u201d<\/p>\n [3]. KHOU 11 News<\/a>. “Nearly 300 Houston retirees still waiting on pension checks, mayor responds.”<\/p>\n [4]. IRS<\/a>. \u201cDefined benefit plan\u201d<\/p>\n [5]. PBGC<\/a>. \u201cWhat PBGC Does Not Insure\u201d<\/p>\n [6]. NCPERS<\/a>. \u201cState constitutional protections for public sector retirement benefits\u201d<\/p>\n