Owed a Pension? Labor Dept. Broadens Effort to Locate Workers

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By Kristen Ricaurte Knebel

A program that began in a Labor Department Philadelphia regional office to help find retirees who are owed money from pension plans has gone national, an agency official told Bloomberg Law.

Since 2015, the regional office of the DOL’s Employee Benefits Security Administration has looked into large defined benefit plans, including some from Fortune 500 companies, that have failed to locate and pay retirement-eligible plan participants who are owed benefits. These participants are vested in the pension plan but no longer work for the employer sponsoring the plan.

In the Philadelphia region, there are approximately 86,000 retirees over the age of 65 who are owed pensions and aren’t receiving the money, a DOL official familiar with the program told Bloomberg Law Dec. 21.

The EBSA’s Philadelphia office recovered more than $274 million for 4,018 individuals in 2017, according to agency data. These retirees are owed pensions from the 50 largest sponsors in the Philadelphia region, the official said. The located retirees receive lump sum payments for money they are owed, the official said. The individuals are terminated vested participants, or employees who worked long enough to vest into a pension plan but aren’t accruing pension benefits.

The Philadelphia office began investigating these cases when the EBSA noticed a flurry of phone calls each month on the day Social Security payments were distributed. Participants who called said their statements indicated they may have pensions, but they weren’t getting them.

Investigators in the EBSA’s Philadelphia regional office found that plan sponsors had faulty data that included missing Social Security numbers, incorrect dates of birth, or retirees who were listed as John or Jane Doe. One plan had around 100 people who were listed as having birth dates of Jan. 1, 1900, the DOL official said. These kinds of “red flags” are things plans should take notice of, the official said.

The EBSA’s Chicago Regional office adopted a “missing participant” regional initiative in fiscal year 2017. That office has been working with the Pension Benefit Guaranty Corporation on this issue and has recovered nearly $6.3 million for 133 participants, according to DOL data.

10,000 Letters

Now the DOL is expanding its search beyond the Philadelphia and Chicago regions.

To help plan sponsors find participants, the Philadelphia office has sent letters to 10,000 people and gotten about a 20 percent response rate, the DOL official said.

One employer group has asked the EBSA for “comprehensive guidance on plan fiduciary responsibilities with respect to unresponsive and missing participants.” The group said the DOL has taken “ad hoc enforcement positions” when approaching plan sponsors about missing participants.

When asked about this, the agency official said retirement plan sponsors that the DOL has approached are happy to have help locating these people.

“We’ve gotten some really good cooperation from these plans. No one has said ‘no’ to us on helping improve their processes. They are interested in connecting these people with their pensions,” the official said.

As for what steps plans can take if they’re looking for missing participants, the DOL official said that pension plans need to “scrub their data” to find these people. “Look at the data that you’ve got and start looking for the red flags that I described. That is the best advice I can give anybody.”

The DOL isn’t the only agency to work on the problem of unpaid pensions. The PBGC issued a final rule Dec. 21 extending its program on missing participants in defined benefit plans to terminated defined contribution plans, such as 401(k) and profit-sharing plans. These plans would have the option of transferring benefits to the PBGC.

In the final rule, the PBGC said the DOL plans to review and possibly revise regulations and guidance to coordinate with PBGC’s implementation of a final rule on missing participants.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at kknebel@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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