What recourse does a employee have if their retirement was under funded, and no one was informed.

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What recourse does a employee have if their retirement was under funded, and no one was informed.

Asked on June 24, 2009 under Employment Labor Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

By "underfunded" do you mean that either (1) the employer did not contributions to the plan that they were legally obligated to, whether by an employment or union contract or some other written instrument, or (2) the employer took money from your account for retirement contributions (such as for a 401k), but did not actually make the contribution?

In either case--if there was an actual legal obligation--then you can sue the employer for not having met it. You can get the money that should have gone in, though in a down investment market, you may not be able to effectively get interest on that money (after all, if everything's suffered a loss, there's no gain to be had).

In case (2), the employer also committed a crime: theft, since they took your money. You can report them to the police.

Note that must be an actual obligation. If the employer made contributions to retirement plan completely voluntarily, as a "gift" to employees (akin to a holiday bonus, which is usually fully discretionary), there  would not be liabilty...but that's a rare case. Usually, if there is a retirement plan, there is something spelling out the obligation to contribute. As long as there was an obligation, you can sue.

B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

This isn't a simple question at all.  Employee retirement plans are regulated in a number of ways, but mostly by the federal Employee Retirement Income Security Act, "ERISA".  This is an extremely technical area of the law, and it's likely that a lot of factual information will be needed to determine what, if anything you can do about this.  You need to speak to an attorney who is familiar with ERISA, who can review all of the details of your case and give you reliable advice about what to do next.  One place to find a lawyer in your area is our website, http://attorneypages.com


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