Retirement Benefits for Employees & Their Legal Rights
When employees get older, it is common for their employers to wonder whether they have plans to retire. This may be relevant to planning the workforce and ascertaining staffing needs. An employer is permitted to ask you and other older employees whether you plan to retire.
For some employees, retirement is an event they have been looking forward to for years. Retirement is sometimes accompanied by significant benefits, particularly in industries where unions have bargained for these benefits.
Depending on your job, you may become eligible for pension payments upon retirement. Pensions, when they are given, are often governed by federal statutory laws such as the Employee Retirement Income Security Act (ERISA). Any employer that engages in interstate commerce and gives its employees defined benefit plans must abide by ERISA, which offers detailed regulations. For example, it regulates which employees must receive a pension if they are offered and requires that pension plans give benefits to any survivors upon the death of an employee. Employers that follow ERISA guidelines receive special tax treatment.
Although Social Security benefits are somewhat uncertain for future generations, if you have worked for many years and are currently about to retire, you probably can count on receiving these benefits as well. Employees can apply for Social Security benefits after they reach the age of 62.
For other employees, however, it can be nerve-wracking to imagine life without working, and questions from an employer can bring about stress rather than excitement. If you are an older worker who feels trepidation about retirement, you may be wondering whether your employer can force you to retire. In most cases, the answer to this question is no.
Mandatory Retirement
In general, federal law does not support forced retirement based on age except in certain industries and professions, such as some types of government jobs or where safety is at issue. For example, the mandatory retirement age for airline pilots is 65. For federal law enforcement officers, firefighters, and national park rangers, the mandatory retirement age is 57, but it may be later if you have fewer than 20 years of service.
For covered employers in most industries, mandatory retirement is disfavored. The Age Discrimination in Employment Act of 1967 (ADEA) protects employees and job applicants who are 40 years of age or older from employment discrimination based on age. Employment discrimination includes any term, condition, or privilege of employment.
For example, suppose you are in your 60s and your manager has asked when you are going to retire, and you have replied that you don’t plan to retire soon. Immediately afterward, he or she takes away a number of prestigious job assignments and transfers you to a department with lower pay. He or she may be trying to pressure you to retire. In that case, it may be appropriate to complain to Human Resources or consult an employment attorney about age discrimination.
Early Retirement Packages
In some cases, an employer will extend an offer of early retirement or buyout. Usually, a buyout is for a younger worker who will be looking for another job after the current job ends, and it typically consists of a lump sum or periodic payments for a short defined period. Early retirement packages are offered to older workers nearing retirement age, if an employer thinks they might be willing to retire early with enough incentive. Early retirement packages may include a variety of incentives, including an agreement to start paying pension payments early.
You should be aware that if you quit your job voluntarily and take an early retirement, you might not be eligible for unemployment benefits. You would be eligible for unemployment benefits if your employer told you that you would be laid off for refusing a buyout or early retirement package. In that case, you might also have a claim against your employer for age discrimination.
Many employers will be careful not to tell you that you will be laid off if you refuse to take an early retirement, and in such cases it will be more difficult to determine if you left voluntarily. If you do accept an early retirement package, your employer may ask you to sign away your right to sue for age discrimination. It is wise to consult an employment or labor law attorney before signing any agreement of this nature.
