Learning to Protect Your Pension
Continental Airlines pension controversy raises pension danger awareness.
May 27, 2009 — -- Some people may marry for money, but recently several airline pilots have been accused of divorcing for cash.
Continental Airlines claims nine pilots divorced their spouses, who were named as the benficiaries for their pensions, and then remarried the same spouse after the payouts began. It's essentially a form of alimony in reverse.
According to the suit, filed in U.S. District Court in Houston, the pilots and their spouses divorced so that they could take advantage of a provision in federal pension law that allows an ex-spouse who was named as a beneficiary in a pension to receive all or a portion of the funds in the event of divorce.
The suit seeks to have the pensions that were paid out returned to the airline, as well as any interest that might have been earned on the money that was paid out.
All of the pilots named in the suit have either been fired or resigned, Continental said, except for one, who agreed to repay the money.
ABC News Aviation expert John Nance says this isn't the first time something like this has happened.
"Some of the shenanigans that have been pulled with airline pensions in the past, you can see how people would be anxious, but it certainly doesn't justify this kind of action," Nance said.
But it is not just employees of the airline industries who are growing worried over their retirement plans.
"Everybody is panicking right now," Karen Friedman, of the Pension Rights Center, said on "GMA" today. "Everybody is saying right now, 'What is going to happen to my retirement security?'"
Cash-strapped companies are cutting back everywhere possible, and one target has been retirement plans. With the stock market down, companies have been forced to contribute more money to their plans in order to keep them fully funded. Several are deciding instead to end future contributions to the programs.
Another set of workers has another concern: Their companies have gone into bankruptcy. Pensions are insured through the Pension Benefit Guaranty Corp., a creation of the Employee Retirement Income Security Act of 1974. But there are limits to the insurance, now $54,000 a year for workers who retire at age 65. Younger retirees receive less.
If you have any concerns, you should get a recent summary description of your company's plan. Employers have to send you a statement telling you whether your plan is well funded or not. Pay attention to that. Don't panic if it's not well-funded right now -- very little out there is. Know that it can come back, but keep yourself aware of what's in the plan.
Let the Employer Know Pension Benefits Are Important To You
Tell your employer how important it is to you to have a pension. Employers think their employees don't care. We are trying to encourage employers to stay in this plan. We want all Americans to retire with enough money to make ends meet.
ABC News' Scott Mayerowitz contributed to this report.
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