Another reason why I am not counting on pension

[Deleted]

My employers does offer a pension plan and like I said before... it would be nice to get it but I am not counting on it. This article re-affirmed my decision : online.wsj.com/article/SB10001424052748703643104576291253976495500.html?mod=WSJ_PersonalFinance_PF2

The Supreme Court is set to answer a question with huge implications for workers: Are employers' promises of benefits such as pension payments and health-care insurance worth the paper they are written on?

So far, lower courts have answered with a resounding "no"—leaving employees from managers to factory workers at risk of being short-changed when it comes time to tap benefits they have been promised.

The case, which concerns the pension plan at Cigna Corp., could be decided as soon as Monday. At issue: If your employer deliberately provides inaccurate information about your benefits, and you rely on it to your detriment, do you have recourse?

The outcome not only could reshape the pension expectations of Cigna employees. It also could have a significant impact on 401(k)s, health plans, disability insurance and other employer-sponsored benefits.

Among the many people who would be affected: Paul Frommert, who retired after 39 years as a regulatory-compliance manager at Xerox Corp. and now spends most days on the golf course. The 72-year-old isn't polishing his putting—he is working part-time to pay for groceries and other essentials. He also mows lawns.

For years, the Ontario, N.Y., resident says, he believed he had a pension worth roughly $3,000 a month, based on his annual individualized benefit statement from Xerox.

But the statement didn't disclose that because Mr. Frommert had left the company from 1985 to 1989, he was subject to a different pension calculation that, as it turned out, reduced his payout to zero.

Mr. Frommert and other Xerox employees sued on the basis that the calculation was unfair, and that the company failed to tell them about it. The Second Circuit Court of Appeals twice ruled in the Xerox employees' favor, and required Xerox to recalculate the benefits. Xerox then appealed to the U.S. Supreme Court, challenging whether a court could tell a company how to administer its own pension plan. Last year, the high court agreed that Xerox could use its own method to calculate the benefits, which it is in the process of doing.

"We believe this action should help reduce the complexity and expense of [pension] litigation going forward and allow for more predictability and uniformity in the administration of pension plans," a spokesman for Xerox wrote in an email.

The outcome of the Cigna case could determine whether Mr. Frommert and other Xerox retirees get the pension they expected.

To be sure, most employees can rely on what their employers tell them about their benefits. But regardless of how the Cigna case plays out, you need to be aware that if your employer gives you wrong information—even if it is in writing—and you act on it, you may be out of luck.

It is especially critical to keep this in mind when making life-changing and often irrevocable decisions—such as whether to switch jobs, retire, take a payout or modify a life-insurance policy. Usually, the only thing that determines the benefit in the event of a dispute is the formal plan document.

Here's what you should know before making those decisions:

• Get it in writing.

Employees generally assume benefits administrators know what they are talking about. Richard Todisco did. According to court records, the 47-year-old Verizon Communication Inc. employee called the company benefits hotline on several occasions between November 1999 and January 2000 to inquire about buying additional life insurance to cover his wife. The person at the other end of the 800 number told Mr. Todisco that during the open-enrollment period he had the right to double the level of his insurance benefits to $176,000 without submitting any statement about his current health, according to court documents.

He signed up for $88,000 in supplemental coverage in 2000, and named his wife, Diane, the beneficiary. Assuming she would get the benefit, Mr. Todisco, who lived in Salem, N.H., removed her from his primary life-insurance policy and replaced her with his two daughters.

He died shortly thereafter, and Verizon refused to pay the supplementary coverage to his wife because Mr. Todisco never submitted a statement of his current health, as the plan required, according to court documents.

Ms. Todisco sued, and in 2007 the First Circuit Court of Appeals upheld a lower court's conclusion that regardless of what the benefits person said, employees had to follow the plan rules.

Similarly, after Alex Ladouceur, a president at Credit Lyonnais Rouse in New York, learned the company was going to be absorbed by its parent, Credit Lyonnais, in 2001, he says he met with the director of human resources to ask what would happen to his benefits. Mr. Ladouceur says the HR executive encouraged him to stay, saying his salary wouldn't be cut and that his 13 years at the subsidiary would count toward a pension at his new employer.

Soon after the merger, the company cut Mr. Ladouceur's pay and he quit. He subsequently learned that only his service after January 2001 would count toward his pension, resulting in a total benefit worth less than $10,000 instead of the $100,000 he had been expecting. He and other former employees sued—but because they didn't have anything in writing, they had no legal claim, said a federal court in New York. The ruling was upheld on appeal in 2009 by the Second Circuit Court of Appeals.

In court, Credit Lyonnais didn't contest that in meetings it had told the employees their former years would count toward their pension, but said it had to follow the legal terms of the written plan document.

Verizon had no comment.

• Be especially careful with spinoffs and mergers.

When Abbott Laboratories spun off its hospital-supply business Hospira Inc. in 2004, the 9,200 workers in the unit say they were led to believe that little would change. Initially, that was true. They sat at the same desks doing the same jobs, and had the same parking spots.

Companies want workers to stay during transitions, so they often promise that pay and benefits won't change, says Karen Ferguson, director of the Pension Rights Center, an advocacy group in Washington. But, she adds, one of the first things many companies may do is cut benefits. Abbott and Hospira both said they made no promises about benefits.

After the spinoff was complete, Hospira terminated retiree health benefits and froze the pension. The Hospira employees alleged that management planned all along to eliminate their benefits and used the spinoff to accomplish this. A federal district court in Illinois ruled that the employees failed to provide credible evidence to support their claim that the spinoff was intended to deprive them of their benefits. The employees have appealed to the Seventh Circuit Court of Appeals.

"Potential employee benefit savings never factored into the decision to create the spinoff," a Abbott spokesman wrote in an email, "and the decision to terminate the pension plan and retiree medical benefits after the spinoff was completed was Hospira's."

A Hospira spokeswoman wrote that the court's decision "validated our long-held position that Hospira acted in compliance with the law at all times."

• Look beyond the official plan summary.

Employers are required to disclose all critical details of their benefits plan in the so-called summary plan document, or SPD. In Amara v. Cigna, a lower court in New Haven, Conn., concluded that the global health-services company's SPD failed to disclose that employees' pensions would stop growing after it changed the plan in 1998, and gave them "downright misleading" information in handouts and meetings. In a decision affirmed in the Second Circuit in 2009, the court ordered Cigna to give the 27,000 employees the benefit it led them to believe they were entitled to receive, an estimated total of $80 million.

The issue now before the Supreme Court isn't whether Cigna deceived employees—Cigna isn't appealing that decision. Instead, the company is arguing that to qualify for the benefits, the employees would have to prove they relied on the information the company provided, to their detriment. For example, a person would have to prove that if he knew his pension was frozen, he would have retired or taken another job.

Advocates for retirees say that if the court agrees with Cigna, the ruling would effectively preclude employees from bringing class-action suits and make it almost impossible for employees to win a claim, since they would have to prove they would have acted differently if they had known.

This, they say, would essentially remove any penalty for employers that deliberately mislead employees about their benefits. "Is this court going to say it's OK to lie to participants?" asks Mary Ellen Signorille, senior attorney at AARP, which, along with the U.S. Department of Justice, filed briefs on the employees' behalf, as they also had done in the Xerox case.

Cigna declined to comment.

The outcome of the case also will affect the Xerox retirees, by making it more difficult for them to challenge the calculation.

Mr. Frommert initially left Xerox in 1985, taking his profit-sharing payout of about $140,000. When he was rehired in 1989, he got credit from his earlier years toward his pension, and understood that his earlier payout would be subtracted from the total.

But he didn't know that Xerox created what it called a "phantom account" for his 1985 payout, credited it with hypothetical interest pegged to stock-market returns—often in the double digits—and subtracted the total from his pension. Mr. Frommert's phantom account, like that of dozens of other rehired employees, exceeded his pension, so he received nothing for his second period of service.

Mr. Frommert, who was laid off in 2002, says that had he known he would receive no pension for his second, 13-year stint at Xerox, he could have taken a different job back in the 1980s, or saved more money. By the time he discovered the truth, he says, it was too late to do anything.

In the Supreme Court's April 2010 decision in the Xerox case, Chief Justice John Roberts, writing for the majority, said a "single honest mistake" in administering and interpreting its pension plan—such as not including details about how benefits were calculated—wasn't enough reason to take away the company's right to determine how to administer its plan.

The ruling meant that Xerox now has a second chance to calculate the pension benefits at issue. If the company again uses a method that erases much of the value of the pensions, the retirees can still challenge it in court.

But if Cigna wins its case, it would be difficult for the Xerox employees to prevail. Each would have to file a case individually—and prove if they had known their pension would be so small, they would have taken another job, say, instead of returning to the company.

Mr. Frommert says he long ago drained his 401(k) and spent his life's savings. He and his wife, Linda, who had stayed home raising their four children, sold their house of 23 years and borrowed money from a daughter whose home they are renting. Last year, they declared bankruptcy.

[Gardening Grandma]

I'll be very interested to see what the Supremes decide. Thanks for the link.

[Deleted]

Also just in case some need it :

Where to Go for Help
The Pension Protection Act, which took effect in 2007, requires plans either to provide individualized pension statements every three years, disclosing the total benefits earned, or notify participants every year that benefit statements are available upon written request. (Quarterly statements must be provided for 401(k) and similar accounts, and annual statements for profit-sharing plans.)

The only way to be sure the benefit is accurate is for the employee to check the plan's calculation against the terms of the pension plan and the formal plan document. "Since plan documents are extremely complicated, it's a good idea to ask for help," says Karen Ferguson, director of the Pension Rights Center. The American Academy of Actuaries' Pension Assistance List will provide up to four hours of free help to individuals interested in checking their plans' calculations.

If it looks as though a mistake was made, residents of 29 states can look to the U.S. Administration on Aging's six regional pension-counseling projects. The projects provide free legal advice on retirement plans and help people pursue their benefit claims. "They have recovered millions of dollars in benefits for thousands of people," Ms. Ferguson says. (Go to www.pensionrights.org/counseling-projects for a list of projects and the states they cover.)

Help is also available from the toll-free hotline at the Labor Department's Employees Benefits Security Administration (866-444-3272, or at askebsa.dol.gov/SecInit) and through PensionHelp America, an online referral service, at www.pensionhelp.org.

[formerexpat]

Another reason why 401k's are so much better. Now, we just need them to be offered by all companies and get people to realize the importance of saving instead of buying cars and phones they can't afford.

[busymom]

But for the companies that offer a match on 401K's, this ruling could affect what happens with "match" money.

[Gardening Grandma]

Now, we just need them to be offered by all companies and get people to realize the importance of saving instead of buying cars and phones they can't afford.

I agree, but clearly there are some folks out there who are more attached to their cars and iphones than their future security.....

[Deleted]

May 7, 2011 12:37:03 GMT -5 formerexpat said:

Another reason why 401k's are so much better. Now, we just need them to be offered by all companies and get people to realize the importance of saving instead of buying cars and phones they can't afford.

True but a lot of people stayed with one companie for the pension.
I know that is certainly the case for the company I work for, we have a lot of lifers that their whole retirement plan is the pension and profit sharing plan.

My problem is: be upfrontm if you don't want to give out pensions, don't. This way everyone knows where they stand. It's another to work 30 or so years for a company expecting and being told you would get a pension, only to get nothing.

[Gardening Grandma]

I think the best thing workers can do to protect themselves is follow the advice in the article, "Get it in writing".....Don't take anyone's verbal word.
Good advice anyway...

[cubefarmer]

Don't be so sure about 401k's. My relative who has been with her company for 20 years - the 401k started 12 years ago - just found out that their 401k plan has never been audited and is very top heavy. They had two inept Controllers during this time. The company hired an ERISA attorney and they are figuring out what to do now. The top earners have been warned there will be taxes and fines coming as well as the company paying fines.

[bring in the new year]

But if I understood the article correctly, the Xerox employee actually had it in writing - in his annual statement and they didn't tell him it was a shadow calculation until after he retired.

Somehow, the very term shadow calculation does not say honest mistake to me.

In some ways, 401ks are better IF (and it's a pretty big if) you know they hold what they say they hold, if you know how they're valuing what they hold, if what they hold is not company stock and if you have real choice in what it is invested in.

As long as the 401k holdings are in mutual funds from companies that you can track in the stock exchanges, okay. But remember, if it's in company stock, if in it's illiquid assets, if anything about the company's managment leads you to believe they're from the Enron school, 401ks aren't guaranteed either.

[Deleted]

I DO count on my pension as a public school teacher. It seems I will have to pay more for it in the future (7.5% instead of 5%). But if I do that (and I will), I do count on the taxpayers of Alabama to pay it.

I DON'T count on that as all of my retirement. I am currently contributing $400 towards my 453b account (letters may be wrong) and $125 towards my Roth. If I have some extra $$$ left at the end of the year, I will make an additional contribution.

Social Security, though, is scaring me more than pensions. My DH gets $27,000 a year from them (high earner/lots of years). That is honestly as much as my pension would be. My own benefit will be nothing like that . . . if it is even there.

[achelois]

There are several people in my department who are saving very little, if anything, for retirement because they are counting on the hospital pension to be there in 25 years when they retire.

By the time I was hired, the hospital had stopped the pension for new hires, so it may, over time, freeze the benefit for those currently covered, but or default entirely depending on what goes down in the healthcare arena.

I feel like Cassandra on the walls of Troy.

[BeenThere...DoneThat...]

...this just screams "diversify your portfolio" to me, a la Enron...
...iow, paper, schmaper... if a company flops, so does its promises...

[resolution]

I think we need to diversify the types of investment vehicle in addition to diversifying the portfolio inside of it. Pretty much everything is a risk these days. My pension is fully funded but the state keeps making a grab at the money by trying to pass legislation requiring the pension to divest their stock portfolio and buy crappy state bonds. My rental property is at the mercy of my tenants who could trash it or cook meth in the bathroom and wreck the value of it. My Roth is at the mercy of the legislature that could pass legislation to double tax it or means test other programs based on it. DH's pretax contribution this year was stolen by his employer that withheld the money and then never deposited it into his account. Even stockpiling treasury bills exposes you to inflation risks. Really there is nothing guaranteed or safe, you just have to diversify enough so that if something bad happens in one area you have enough in other areas to still be successful.

[TD2K]

Conceptually, I prefer the concept of a 401k plan because of its portability. Few people nowadays work with one company for life. However, companies in my opinion have used 401ks to shift the majority of the cost onto the employees. Many 401k don't have any match and even with a reasonable match, the capped limits usually mean the company puts very little into your retirement on a yearly basis.

Granted, your overall compensation is a total of your pay, retirement benefits and other benefits so it may be a moot point if it means that you get paid more for the company being able to avoid the risk of having to pay a long term pension.

[ameiko]

Best way to fix this is to see the boss with your shotgun and have him or her "say hello to my little friend!"

You'll be in jail but the next boss isn't going to skimp on the pension.

Seriously, I'm a hardcore free marketer but that includes honoring contracts which includes pension promises. I mean:

For years, the Ontario, N.Y., resident says, he believed he had a pension worth roughly $3,000 a month, based on his annual individualized benefit statement from Xerox.

But the statement didn't disclose that because Mr. Frommert had left the company from 1985 to 1989, he was subject to a different pension calculation that, as it turned out, reduced his payout to zero.

If the courts will not honor an agreement, then it falls to the citizen to ignore the law and enact justice. How any court can justify a company stating that a 4 year absence justifies zeroing out his pension ESPECIALLY after the written promises over the decades defies all logic.

When the courts are corrupt, ultimately citizens must take actions. Quite frankly, justices and lawyers must fear the common man such that laws and rulings continue to have some modicum of justice.

I think of the courts that have ruled that man who were couckoled still had to pay for another many's child. A group (or mob if you will) of armed citizens who stormed that judge's court room would quickly set such an injustice to right.

I think of the case where the right of eminent domain was abused not to build a public school, road, or bridge but instead the government seized a person's home to give to a corporation. Setting ablaze both the judge's home and the business' headquarters would certainly discourage the next miscarriage of justice.

Mob justice is usually a thing to avoid since it is based on emotions but if we can be guided by the common belief that the law must enforce valid contracts (and not enforce fraudulent ones), then the people who are the ultimate arbiters will enforce their will justly.

The courts can find facts and rule in tricky cases but for a judge to simply violate the law or the Constitution is abhorent and we cleave closer to that than ever.

Consider the Supreme Court which should have our finest judges yet they have split decisions of 5 to 4 and their appointments are politicked over as much as any other posistion in America. Is the law not the law? Is the Constitution not written in plain English?

Yet we have Soto Meyer, the "wise Latina", refusing to answer if a citizen has the right to defend themselves. We have the Washington DC arguing that the Constitution does not apply within its borders since it is not a state: will we also allow slavery to exist in that city as well?

Scary times and it will be worse as the government grows more instrusive and invades our lives more... and often at the behest of the sheeple who have inherited a great nation from those who risked all to create a better life rather than steal it from someone else.

[ameiko]

May 8, 2011 10:11:40 GMT -5 BeenThere...DoneThat... said:

...this just screams "diversify your portfolio" to me, a la Enron...
...iow, paper, schmaper... if a company flops, so does its promises...

I don't understand that. The company (and governments for that matter) are supposed to properly fund a pension every year. If the company flops, the pension funds are still there and thus should be making our the payments as promised as of the date of the company's demise. So if you had earned 2K/month as of this year and your company goes belly up, those funds should still be there, right?

That said, many companies and especially state governments do not fund properly but instead will use unrealistic projections in this numbers. You really can't trust anyone.

[MN-Investor]

Best way to fix this is to see the boss with your shotgun and have him or her "say hello to my little friend!"

You'll be in jail but the next boss isn't going to skimp on the pension.

Right. You are living in a fantasy world if you think this would be effective. Mob rule? Threatening lawyers and judges? Equally effective.

[Deleted]

May 8, 2011 13:52:34 GMT -5 MN-Investor said:

Best way to fix this is to see the boss with your shotgun and have him or her "say hello to my little friend!"

You'll be in jail but the next boss isn't going to skimp on the pension.

Right. You are living in a fantasy world if you think this would be effective. Mob rule? Threatening lawyers and judges? Equally effective.

While I agree this would not be the best course of action... The actions of that corporation does make your blood boils enough to understand someone would want to do that.

I mean the guy got a statement every month/year letting him know how much he would be getting only for one day for them to tell him: sorry our bad, you actually get nothing.

I remember in college, business law 101, my professor said : which would prefer? Be in your 20's and get robbed at gun point or in your 60's and get robbed of your life savings? Guess what, the person that robs the 60 year old of their life savings will most likely do less jail time than the person that robbed the 20 year old.

[Phoenix84]

I'll play devil's advocate for a bit.

I can sort of see the company's side too. You have an employee who changed companies or did something else and doesn't take the time to review the pension policy, and doesn't qualify. He then retires and finds out he doesn't get a pension and sues you because you "misled" him, when in reality he just didn't bother to look and see. Should your business be on the hook for his pension? Should an employee get a pension because they "think" they should get a pension?

I think as long as the records show you paid into the fund and can prove the company specifically misled you then you do have a case. Otherwise you don't.

I work for the federal government and will qualify for a pension. It's on my pay stubs that I'm in the retiremen system and paid this much to the fund. I don't see how the government could yank the rug out from under me at 65.

[formerexpat]

Granted, your overall compensation is a total of your pay, retirement benefits and other benefits so it may be a moot point if it means that you get paid more for the company being able to avoid the risk of having to pay a long term pension.

It is a moot point. Companies look at you as a total cost, including retirement benefits.

In theory, if you don't get a match from Company A but would from Company B, then Company A **should** have salaries that are higher than Company B to offset for that fact.

[Deleted]

May 8, 2011 18:49:29 GMT -5 Phoenix84 said:

I can sort of see the company's side too. You have an employee who changed companies or did something else and doesn't take the time to review the pension policy, and doesn't qualify. He then retires and finds out he doesn't get a pension and sues you because you "misled" him, when in reality he just didn't bother to look and see. Should your business be on the hook for his pension? Should an employee get a pension because they "think" they should get a pension?.

That is where you are wrong.

He did read his statement and from them thought he would get a pension.

Per the article:

For years, the Ontario, N.Y., resident says, he believed he had a pension worth roughly $3,000 a month, based on his annual individualized benefit statement from Xerox.

The company didn't even deny that they indeed deceived the employees.

The issue now before the Supreme Court isn't whether Cigna deceived employees—Cigna isn't appealing that decision. Instead, the company is arguing that to qualify for the benefits, the employees would have to prove they relied on the information the company provided, to their detriment. For example, a person would have to prove that if he knew his pension was frozen, he would have retired or taken another job.

Instead a employee relying on the statements he got in the mail to plan his retirement is out of luck because big oooppps, it was a "single honest mistake" by not telling employess that the amount they are getting in their statement is wrong. WTF? What is the purpose of the statement if they can be wrong?

Per the article

In the Supreme Court's April 2010 decision in the Xerox case, Chief Justice John Roberts, writing for the majority, said a "single honest mistake" in administering and interpreting its pension plan—such as not including details about how benefits were calculated—wasn't enough reason to take away the company's right to determine how to administer its plan

So basically you are telling me it's ok and I might as well throw away the statement I get from my company every year in the trash ...

becaus after all what stop them to go when it time to pay out : Opps, the statement you have been getting all those years did not represent the true value of your pension. Our bad

[TD2K]

At issue: If your employer deliberately provides inaccurate information about your benefits, and you rely on it to your detriment, do you have recourse?


There definitely seems to be an issue of fairness here that is being totally ignored. How can a company 'deliberately' provide misleading information and then be able to avoid any liability?

[TD2K]

becaus after all what stop them to go when it time to pay out : Opps, the statement you have been getting all those years did not represent the true value of your pension. Our bad

You forgot the "Sucks to be you"

[ameiko]

May 8, 2011 18:49:29 GMT -5 Phoenix84 said:

I'll play devil's advocate for a bit.

I can sort of see the company's side too. You have an employee who changed companies or did something else and doesn't take the time to review the pension policy, and doesn't qualify. He then retires and finds out he doesn't get a pension and sues you because you "misled" him, when in reality he just didn't bother to look and see. Should your business be on the hook for his pension? Should an employee get a pension because they "think" they should get a pension?

I think as long as the records show you paid into the fund and can prove the company specifically misled you then you do have a case. Otherwise you don't.

I work for the federal government and will qualify for a pension. It's on my pay stubs that I'm in the retiremen system and paid this much to the fund. I don't see how the government could yank the rug out from under me at 65.

The problem with your take is that he DID look and it DID say that he was getting about 3k a month in pension. He didn't assume anything... the promise was there in black and white.

[ameiko]

May 8, 2011 13:52:34 GMT -5 MN-Investor said:

Best way to fix this is to see the boss with your shotgun and have him or her "say hello to my little friend!"

You'll be in jail but the next boss isn't going to skimp on the pension.

Right. You are living in a fantasy world if you think this would be effective. Mob rule? Threatening lawyers and judges? Equally effective.

Sorta like how our Founders stood up to the British?

I did note that I am quite wary of mob justice: the courts should be the ultimate arbiters as long as they are just.

Telling a retiree that his statements are bogus and denying him the pension that his employer said he was earning is not just.

Telling a man that he must continue to support the child who he thought was his yet is not is unjust.

Telling a home owner that law makers can use eminent domain to give his home to a private individual or corporation in violation of the constitution is unjust.

When judges send innocent people to jails that they themselves derive funds from, that is unjust.

When these and other cases happen, the law and the courts have failed us just as our Founding Fathers were failed by the British. At this point you either cower like slaves or stand up as free citizens!

I guess we know where you stand.

[MN-Investor]

I guess we know where you stand.

Absolutely. For using legal means to effect change.

You begin by reading the rulings to understand what's behind the decision. If it's a lower court, it can be appealed. If it's a higher court, the underlying law can be changed. Or judges can be changed. If they're voted for directly, seek to unseat them. If they have permanent status and are appointed - such as Supreme Court justices - then vote for presidents which agree with your views so that Supreme Court vacancies are filled with capable judges.

The very idea of using violence is ludicrous. Pulling a gun on a single judge accomplishes nothing. And thinking that turning the country upside down with a revolution is going to produce a legal system magically aligned with your specific views is naive.

[happyscooter]

But if I read it correctly, Frommert took $140k out when he left. So he was going to deduct that from whatever he was given when he went back. But he didn't have that much when he went back, thus resulting in a negative balance.

Example: I went to work at XYZ Company and got 2 weeks of vacation a year, one for each 6 months. If I took 2 weeks in April when I had not built up any time technically, I should not have been paid for the 2 weeks off. If I choose to leave XYZ Company in May, the company should be able to hold back my last 2 weeks paycheck. And if I got paid weekly, I would owe the company $$$ out of my pocket.

[Deleted]

May 9, 2011 6:53:22 GMT -5 happyscooter said:

But if I read it correctly, Frommert took $140k out when he left. So he was going to deduct that from whatever he was given when he went back. But he didn't have that much when he went back, thus resulting in a negative balance.

Example: I went to work at XYZ Company and got 2 weeks of vacation a year, one for each 6 months. If I took 2 weeks in April when I had not built up any time technically, I should not have been paid for the 2 weeks off. If I choose to leave XYZ Company in May, the company should be able to hold back my last 2 weeks paycheck. And if I got paid weekly, I would owe the company $$$ out of my pocket.

No you are wrong. He got money from his "profit sharing plan" not his "pension". A profit sharing plan is totally different from a pension.

I have a profit sharing plan at work and it is used for the two following:
-> companie matches to 401K in the form of company stocks
-> companie profits being rewarded to the employees in the form of company stocks.

If I were too leave tomorrow or next year, I can do two things:
-> cash our my profit sharing plan or
-> live it with the company till I retire (hopefully will be worth more since the company stocks would be worth more) and withdraw it with my pension.

He understand that off course since he took out $140,000 when he left, he would not be getting it at retirement. DUH! Obvious. When I get my annual statement, it has two parts:
-> one titled Retirement Plan Monthly Annuity (that is the pension) and let me know if I am vester or not
-> the other titled Profit Sharing plan

So in his case, the pension would have remained the same or increased as he stayed with the company but his profit sharing portion would have been reduced by $140,000

Mr. Frommert initially left Xerox in 1985, taking his profit-sharing payout of about $140,000. When he was rehired in 1989, he got credit from his earlier years toward his pension, and understood that his earlier payout would be subtracted from the total.

Mr. Frommert, who was laid off in 2002, says that had he known he would receive no pension for his second, 13-year stint at Xerox, he could have taken a different job back in the 1980s, or saved more money. By the time he discovered the truth, he says, it was too late to do anything.

Basically not only did he not get credit for second stint of 13 years in the company, but he got no credit for his prior 26 years

Among the many people who would be affected: Paul Frommert, who retired after 39 years as a regulatory-compliance manager at Xerox Corp. and now spends most days on the golf course. The 72-year-old isn't polishing his putting—he is working part-time to pay for groceries and other essentials. He also mows lawns.

[Savoir Faire-Demogague in NJ]

No one is entitled to or has any sort of legal claim to collecting social security benefits either.
The Supreme Court hearing and deciding on private pension benefits, when it has already decided that social security benefits are not guaranteed seems ironic to me...