Retirement savings are an essential part of every individual’s financial plan. Pensions provide a reliable source of income for retired workers and help them maintain their standard of living. However, employees may wonder if they can lose their pension if convicted of a felony. This question is pertinent, considering that criminal activity can pose a significant threat to an individual’s assets, including their retirement savings.
Can You Lose Your Pension If Convicted Of a Felony?
Yes, you can have a reduced pension or revoked in some cases, depending on which type of felony. However, each U.S. state has a different policy.
It’s a widespread misconception that all individuals working in public service are entitled to their full pension benefits, regardless of their actions during employment. Unfortunately, this is not always the case. Various state laws can cause forfeiture or garnishment of pension benefits if the member is convicted of certain crimes, often related to their public position. Let’s examine the laws in each state:
Alabama: In Alabama, members of the teachers, public employees, and judicial retirement plans can forfeit their right to retirement benefits if convicted of certain felony offenses related to their public position. Instead, members receive a refund of their retirement contributions. This policy applies to police and is also specific to financial crimes.
Alaska: A similar law exists in Alaska where a public officer convicted of various crimes, including a federal or state felony, bribery, perjury, fraud, or misuse of funds connected with their duties, is denied a state pension benefit. This law extends to police officers and covers financial crimes.
Arizona: Interestingly, Arizona currently has no policy addressing this issue.
Arkansas and Delaware: The state has a unique policy – a beneficiary of the retirement system will have their benefit forfeited if they murder an active member of a public retirement system. However, for this study, these states do not have a specific forfeiture or garnishment policy.
California: If an elected official or employee is convicted of bribery, embezzlement, extortion, perjury, or conspiracy to commit those crimes during their service, their pension is forfeited. This law applies to police and includes financial crimes.
Colorado: Colorado law states that pension benefits may be garnished for restitution for theft, embezzlement, misappropriation, wrongful conversion of public property, or a violation of fiduciary duties to a public pension plan. This law extends to police officers and involves financial crimes.
Connecticut: In Connecticut, pension benefits may be forfeited or garnished by court order for convictions of embezzlement, theft, bribery, or felonies committed by misusing a government office or job. This law applies to police and covers financial crimes.
District of Columbia, Hawaii, Idaho, Iowa, Kansas, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, North Dakota, Oregon, South Carolina, South Dakota, Washington, West Virginia, Wisconsin, and Wyoming: These states currently have no specific policy regarding forfeiture or garnishment of pension benefits for criminal offenses.
Florida: Florida mandates that members forfeit their pension benefits if convicted of committing felonies related to misuse of public office or other crimes. This law applies to police officers and includes financial crimes.
Georgia: In Georgia, public employees convicted of committing crimes related to their employment will forfeit any benefit after the date of conviction. The law applies to the police and is specific to financial crimes.
Illinois: In Illinois, pension benefits are forfeited for members convicted of a felony relating to their service as an employee. This law extends to police officers but is not specific to financial crimes.
Indiana: In Indiana, pension benefits may be garnished upon conviction of a misdemeanor or felony relating to an offense that causes their employer financial loss. The member forfeits any future benefit. This law extends to police officers and includes financial crimes.
Kentucky: Kentucky law dictates that members convicted of a felony related to their public service shall forfeit all retirement benefits. They are, however, entitled to a refund of their contributions plus interest. This policy applies to the police but is not specific to financial crimes.
Louisiana: In Louisiana, pension benefits may be garnished if a public employee or elected official is convicted of misconduct detrimental to their position. This law extends to police officers and covers financial crimes.
Maine: Members convicted of a crime relating to their employment in Maine may have their pension benefits forfeited by court order. Any dollars in the member’s pension account are available to pay for any court-ordered restitution for economic loss to the State or local government due to the member’s crime. This law applies to police but is not specific to financial crimes.
Maryland, Missouri, Ohio, Oklahoma, Utah, and Virginia: In these states, public employees or elected officials convicted of a felony arising from the misuse of their position or related to their duties forfeit their retirement benefits. These policies apply to the police but are not specific to financial crimes.
Massachusetts: Massachusetts law dictates that members convicted of a crime related to their duties as public employees forfeit their pension benefits. Sometimes, members’ contributions may be garnished to pay restitution to the state or employer. This policy applies to police but is not specific to financial crimes.
Michigan: A member in Michigan convicted of certain felonies relating to their public service may have their rights to a pension benefit forfeited, along with the forfeiture of their contributions into the system. This policy applies to police and is specific to financial crimes.
Nevada: Public employees in Nevada hired after 2015, and convicted of a felony, forfeit their rights to a retirement benefit. This policy applies to police and is specific to financial crimes.
New Jersey: New Jersey law allows any state or local board-administered retirement system to cause the forfeiture of retirement benefits for members convicted of misconduct. Members convicted of sexual offenses relating to their service face mandatory forfeiture. This policy applies to police but is not specific to financial crimes.
New Mexico: Elected and appointed officials in New Mexico are subject to garnishment up to an amount of their entire salary and pension benefit if they are convicted on felony corruption charges. This law does not explicitly apply to the police but is specific to financial crimes.
New York, Texas: For any felonious crime committed after a specified year, an elected or appointed official may have their pension benefits forfeited in these states. These policies do not specifically apply to police and are not specific to financial crimes.
North Carolina, Vermont: Any elected official in these states who is convicted on state or federal corruption charges shall forfeit their retirement benefits. These policies do not specifically apply to police but are specific to financial crimes.
Pennsylvania: Pennsylvania law states that any public employee who commits theft, bribery, forgery, perjury, or is convicted of a felony relating to their position will forfeit their right to a pension benefit. Those reimbursed contributions may be used to pay fines or make restitution for the victims of any of those crimes. This policy applies to the police but is not specific to financial crimes.
Rhode Island: In Rhode Island, any retirement or OPEB benefit earned by a public employee will be reduced or forfeited if that employee is convicted of any crime related to their position. This policy applies to police and is specific to financial crimes.
Tennessee: Any employee hired after 1981 and covered under a state retirement plan in Tennessee will forfeit their pension benefit if convicted of a felony in the state court of misconduct. This policy applies to police but is not specific to financial crimes.
A pension is a retirement fund an employee receives from their employer after completing a specified term of service. Employers invest in the employee’s retirement fund, and the employee receives a fixed payment for the rest of their life after retirement. Pensions are a defined benefit plan, meaning the employee knows the amount they will receive upon retirement.
The answer to whether you can lose your pension if convicted of a felony depends on the laws of the state in which you live. Most states have laws that protect pension funds from being seized by creditors, including criminal judgments. However, in some states, pension funds may be garnished by court order upon a criminal conviction. In such cases, the court can order the pension fund to pay a portion of the judgment or the entire amount.
One example is New York’s Son of Sam law, which allows the government to seize convicted criminals’ assets to pay for restitution to the victims. The law was created to prevent criminals from profiting from their crimes, but it has also had the unfortunate effect of confiscating pensions and other assets. As a result, many states have enacted Son of Sam laws that explicitly exempt pension funds from seizure.
Some pension plans have provisions that allow the forfeiture of pension benefits if an employee is convicted of a felony related to their work. For example, if a pension plan administrator finds that an employee has stolen from the company, they may forfeit the employee’s pension benefits. However, such provisions are uncommon and must be explicitly stated in the pension plan document.
In cases where pension benefits are subjected to forfeiture, pension plans typically allow the employee to contest the forfeiture. In such cases, a court may be required to decide whether the forfeiture is valid. The court will consider the nature of the felony, the employee’s employment history, and other relevant factors before deciding.
Conclusion
In conclusion, the loss of a pension due to a felony conviction depends on the laws of the state where the employee lives and the provisions of their pension plan. While some states permit the garnishment of pension funds, most have laws that protect pension benefits from seizure. Therefore, employees should check their pension plan documents for provisions on the forfeiture of pension benefits to understand their rights regarding their retirement savings.
Many U.S. states have laws allowing for the forfeiture or garnishment of pension benefits if a public employee is convicted of a crime, typically related to their duties. This can range from any felony in some states to specific financial crimes or corrupt actions in others. Therefore, public employees need to be aware of their state’s laws regarding pensions, as it can have significant long-term financial implications.
You can learn more about Gold IRA to protect your 401K plan.
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
At Promtfinance.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification.
Read more on Daniel Smith's biography page.
Contact Daniel: daniel@promtfinance.com