Missing Pensions Costly to Retirees
Think you're owed a pension, but no check is in the mail? Here's how to track down your benefits.
People who have earned a defined-benefit pension seem to be in an enviable position -- retiring with the promise of a steady income stream for life. But it's not so enviable if the promised benefits don't show up. And an investigation by the U.S. Department of Labor is finding that many retirees aren't getting the benefits they've earned.
Since last summer, the Labor Department has opened investigations into more than four dozen large pension plans, with eye-opening results: Some do a very poor job keeping track of retired participants and paying benefits when they're owed. In some cases, plans don't even have the names or ages of many of their participants.
Sloppy recordkeeping isn't the only factor separating retirees from their pensions. Corporate mergers, spinoffs and bankruptcies can make it tough for retirees to track down and claim pensions from employers they left years ago. And when pensions are transferred from one administrator to another, or turned over to an insurance company, participant information may be garbled or lost completely.
That puts a heavy burden on plan members to maintain employment records, plan documents, tax returns and other paperwork that can help prove they're eligible for a pension -- and to be proactive about claiming benefits when the time comes.
"There isn't a lot of initiative on the part of plans to pay benefits when they're due," says Jeanne Medeiros, director of the Pension Action Center, a research and advocacy group at the University of Massachusetts Boston. "It's largely up to the participant to come forward and find the plan."
Kenneth Rowland, 68, is just now collecting the pension he was owed at 65. Rowland, who lives in Hull, Mass., earned the pension during his employment in the 1980s with the yellow-pages division of the telephone company Nynex. He did receive a letter from Nynex documenting the pension he had earned . . . in 1992, but nothing after that. When he started trying to claim his benefits in 2013, the telecom industry had changed completely, and Nynex was long gone.
Rowland contacted the Pension Action Center, and a pension counselor finally tracked his pension down at Verizon Communications. That was a surprise to Rowland, who had never worked for Verizon -- but Nynex had merged with Bell Atlantic, which later acquired GTE and became Verizon. The whole process of finding the pension, he says, was "an obstacle course." A Verizon spokesman says that the company has procedures to try to contact participants before they turn 65.
It's not just a few retirees who are slipping through the cracks. Plans the government has examined so far owe more than $500 million to retirees. One plan had thousands of "missing" participants age 65 and older, but the Labor Department was able to find 70% of those people using basic online search tools. "It's a very big problem," a Labor official says, adding that some trustees have "lost sight of this very basic duty" to provide earned benefits to participants.
Keeping Track of a Pension
If you have earned a pension, keep your individual benefit statements as well as the summary plan description, which outlines the requirements for earning benefits. Maintain records of your employment history, including W-2 forms and pay stubs. And hold on to all of your old tax returns. When it comes time to claim your benefits, the plan might say that it has already paid you a distribution -- and you'll need your old tax returns to prove whether or not that's accurate.
If you leave a job before the plan's retirement age, verify that you have a vested benefit and get the plan's most recent summary plan description, which will determine the benefits you receive in retirement. Update the plan on any changes in your address, phone number, name or marital status. "If a person has terminated employment and is no longer at the address of record, the easiest thing for the plan to do is nothing," says John Turner, director of the Pension Policy Center, a research and consulting group in Washington, D.C.
Periodically check your former employer's website, watching for mergers, buyouts or bankruptcies. "One of the main reasons that participants lose track of plans is corporate restructuring," says Jane Smith, policy analyst at the Pension Rights Center.
If your plan is terminating, make sure you know who will be administering the plan. If the plan is sufficiently funded, an insurance company will take over payment of the benefits -- and if not, the plan will likely be turned over to the Pension Benefit Guaranty Corp.
If you've lost track of a pension, go to www.pensionhelp.org to find pension counseling projects funded by the U.S. Administration on Aging. Check an old W-2 to find your former company's employer identification number (EIN), which can help track down the company. Watch out for a "notice of potential private pension benefits," which the Social Security Administration sends as a reminder to people who have earned a private pension. A pension counselor can also help you request this notice from Social Security. Although the information may be out of date, "it's very helpful in terms of evidence you were vested," Medeiros says.
Search for plans that have been turned over to the PBGC at www.pbgc.gov/wr. You can also click "find an unclaimed pension" at this site to find out if your name is on the PBGC's list of missing participants.
If you've been omitted from your plan's records, you must document your work history and eligibility for the benefit. If you don't have W-2s and other employment documentation, you can request a Social Security earnings statement using Form SSA-7050, for $136.
After spending years tracking down his pension, William Ross Berggren finally got his monthly benefit along with retroactive benefits and interest. Berggren, 82, earned the pension from his work at Citizens Savings and Loan in San Francisco in the 1970s and 1980s. By the time he tried to claim benefits in 2010, the bank had been acquired, and he couldn't locate his pension.
Berggren turned to the Western States Pension Assistance Project, which tracked down his pension in a surprising place: the Ford Motor Company. Citizens had become First Nationwide, which was later bought by Ford. Collecting the pension "was a very significant win, even though it wasn't a lot of money," Berggren says. "I've realized as a retired person that oftentimes I need to be my own advocate." A Ford spokeswoman says that the company "has a process in place to find pension participants" when participants are required to start taking distributions.