Effect on pension plan if unpaid wages

If an employer fails to pay wages owed to an employee, this can have an effect on the employee’s pension plan if the wages in question are considered compensation for pension plan purposes.

Under federal law, the Employee Retirement Income Security Act (ERISA) requires that employers count certain types of compensation when calculating an employee’s pension benefits, including base salary and overtime pay. In addition, some pension plans may also count bonuses, commissions, and other forms of compensation.

If an employer fails to pay an employee the wages they are owed, and those wages are included in the calculation of the employee’s pension benefits, this can result in a lower pension benefit for the employee. The employee may be able to pursue legal action to recover the unpaid wages and protect their pension benefits.

It’s worth noting that the exact impact of unpaid wages on a pension plan will depend on the specific terms of the plan and applicable law. If you have concerns about how unpaid wages may affect your pension benefits, you may wish to consult with an attorney or a financial advisor who specializes in retirement planning.