You work hard. You trust your employer to manage and grow your pension fund. Actually, you don’t have a choice. Retirement is around the corner sooner or later and you want to be prepared.

In a perfect world, that is true. Hardworking employees trusted their employers to manage their pension funds. Instead their pension funds experienced pension fund fraud and 401k fraud and 401k losses.

What can you do? Contact a lawyer about 401k losses today.

There are many ways which can affect 401k losses and pension fund fraud.

Misrepresentation of pension fund fraud can happen when a city runs into legal trouble when elected officials want to keep its civil service employees happy by awarding them more generous pensions and healthcare benefit but also want to keep taxpayers happy by enforcing a lean budget. Unfortunately, both together are not foreseeable. The city officials under-funded the pension plan for years but used the proverbial savings to award workers and retirees more benefits. Because taxpayers couldn't see how much retirement benefits for public employees eventually would cost them, they couldn't protest against those high future costs. The fund also violated sound investment principles by using surplus earnings in boom years to pay extra benefits to retirees, including an extra check in some years.

But the scheme escalated when city officials brushed aside warnings from outside groups, as well as from an analyst it had itself commissioned, about the fund's dire financial straits. Although figures clearly showed that the pension fund would face a seven-fold increase in its deficit, to more than $2 billion, over less than a decade, the city didn't disclose what, according to the SEC, it knew or was reckless in not knowing was an inevitability, instead maintaining its charade. City officials disclosed not a word of the fund's financial troubles to potential investors or bond analysts as it raised nearly $300 million in new municipal securities during those two years.

The SEC elected to go easy on the city. This argument has merit, since these taxpayers are already on the hook for the $1.5 billion deficit—roughly equal to the city's operating budget—the pension-fund fraud had concealed. While SEC won't punish taxpayers, it can't afford to go so easy on the officials that are still being investigated.

Hedge funds are another risk for pension fund fraud. Given the general lack of public disclosure about the way hedge funds operate, the lack of standards for measuring a fund's valuation, and its performance, the possibilities for undisclosed conflicts of interest, the unusually high fees, and the higher risk that accompanies a hedge fund's expected higher returns, these are not investments taken casually. They are generally risky ventures that simply don't make sense for public and private pension plans.

Currently, this trend is still in its infancy.  A recent industry report indicated that 80 percent of public pension funds have little or no investment in hedge funds. Public pensions that actively invest in hedge funds allocate 5.1 percent. Still hedge funds need to be better regulated before funding retirement plans in order to avoid pension fund fraud.

Pension fund fraud and 401k losses can also happen when unscrupulous fund managers purposely misappropriate the funds to their own personal gains.

Are you the victim of retirement fund fraud? Contact a lawyer about retirement fund fraud today for a free consultation.