Wednesday, May 27, 2009

Early pension withdrawal: Continental airlines sues a few pilots for a "divorce scam"

A novel pension problem has occurred with nine Continental Airlines pilots. In each case, a pilot divorced his spouse and then the beneficiary (usually the ex-spouse) withdrew money early from his or her pension account, allowed under federal law. When the couples got back together, the airline sued.

The story appeared on ABC “Good Morning America” Wednesday May 27, but there is an account on eTurbonews here.

Pilots say that they fear loss of pensions later because of economic conditions. Karen Friedman, apparently speaking for the Pension Resource Center (link), appeared on the GMA show and said that the pilots’ pensions were safe, and that the PBGC, despite the large increase in its obligations during the recession, still is well funded.

As a whole, I haven't heard of retirees being sued by employers much, but in a few cases retirees have lost pensions when going to work for competitors, especially in the insurance industry. We'll look into that for another posting soon.

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