Terminations, Separation Agreements & U-5s

Early Retirement

Many retirement plans include an option for early retirement before the "normal" or standard retirement age. An employee who chooses early retirement does not get a larger total retirement benefit over his lifetime. Instead, a smaller monthly benefit is paid out over (probabilistically) more years, leading to the same total benefit.

Some pension plans calculate benefits in a way that is especially unfavorable to early retirees by loading most of the pension credits—earned by years of service —into the last five or ten years before normal retirement age. An employee who retires five years early under this system misses a disproportionate number of pension credits and will receive a disproportionately reduced benefit.

In a large reduction in force, an employer may offer a special, time-limited package with an inducement, like extra credit for age or years of service, to enable more people to qualify for early retirement. Courts have held that an offer of this kind does not constitute age discrimination.

Outten & Golden attorneys routinely advise both employees who have reached eligibility for early retirement and those who are offered early retirement as part of a severance package. We also advise and represent employees who are dismissed only a short time before they would have become vested in their pensions or other benefits.

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