MISSING PARTICIPANTS/LOST PLANS
Pension specialists recommended June 4 that the Department of Labor's Employee Benefits Security Administration develop a lost-plan registry to help individuals find retirement income when they have difficulty locating a former employer.
Lost plans are a “significant problem for our society,” especially because many people have not sufficiently saved for retirement, said Ellen A. Bruce, director of the Pension Action Center of the Gerontology Institute at the University of Massachusetts Boston. She advised the creation of a lost-plan registry to keep track of plans even when a company changes name or goes out of business.
In addition, J. Spencer Williams, president and chief executive officer of Retirement Clearinghouse in Charlotte, N.C., said that residency changes, job moves, and early mortality are three primary contributors to plans' having to track down missing or lost participants.
Another witness, Allison R. Klausner, assistant general counsel for benefits at Honeywell International Inc., speaking on behalf of the American Benefits Council, said the Department of Labor should consider establishing or expanding safe harbors for plan sponsors dealing with missing or lost participants of retirement plans.
A number of speakers told the Advisory Council that automatic enrollment and automatic escalation are the most effective plan design strategies for increasing participants' retirement savings, but more-robust default percentages would better protect retirees.
In addition, communicating income replacement projections to plan participants is "one of the best ways" to increase retirement savings, said Donn Hess, managing director for J.P. Morgan Retirement Plan Services in Kansas City, Mo., speaking on behalf of the American Benefits Council.
However, Jennifer Benz, chief executive officer and founder of Benz Communications in San Francisco, said more needs to be done to shift cultural views on retirement and suggested that DOL and other government agencies can assist in this goal by doing the heavy lifting for employers.
Robert S. Newman, a partner in Covington & Burling's Washington office told the Advisory Council that de-risking strategies to eliminate the volatility associated with pension obligations are essential to defined benefit plans' continuing existence, but that he did not suggest DOL adopt any specific guidance on the issue nor that the industry needs additional regulations on de-risking.
John G. Ferreira, a partner with Morgan Lewis in Pittsburgh, agreed that additional regulation is unnecessary and that new rules could result in unintended consequences.
A union representative, Ilana Boivie, research economist with the Communications Workers of America in Washington, added that de-risking is often not in plan participants' best interests and that plans need to take specific steps to protect the participants.
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