(Bloomberg Businessweek) -- As Americans worry about being able to afford retirement, billions in unclaimed retirement funds sit neglected in lost or forgotten accounts.
Regulators and politicians are pushing retirement plan sponsors, as fiduciaries, to work harder to find plan participants who are due benefits. The latest move comes in the Retirement Savings Lost and Found Act of 2018, legislation reintroduced on March 2 by Democratic Senator Elizabeth Warren of Massachusetts and Republican Senator Steve Daines of Montana. The legislation would create an Office of Retirement Savings Lost and Found to serve as a clearinghouse for retirement plan information and require employers to provide data for a national searchable database that could be used by all retirement plan participants. The expansion of auto enrollment in 401(k) plans, along with younger workers frequently switching jobs, will add to the number of missing participants, according to the bill.
The Lost and Found Act follows an announcement last December by the Pension Benefit Guaranty Corp. (PBGC), which insures pension plans, that it would expand its missing participants program to defined contribution plans such as 401(k)s that terminated after Jan. 1, 2018. The voluntary program allows employers to transfer funds or an account holder’s name to the PBGC, which collects a one-time fee of $35 for accounts greater than $250, rather than roll funds into a bank IRA with high annual fees.
More people are being reunited with their money, thanks to a push by the Department of Labor to audit more retirement plans’ missing-participants lists. After a successful pilot program in the department’s Philadelphia Employee Benefits Security Administration (EBSA) office, which recovered more than $274 million owed to 4,018 people in 2017, field offices around the country are stepping up their audits. The Philadelphia project was sparked, in part, by a surge in calls in recent years from consumers receiving a notice from the Social Security Administration. The letter, sent to Americans nearing retirement age, shows what private pension information the SSA has on file.
If you suspect you’re owed benefits, the first step is to search the PBGC’s online database at pbgc.gov. A caveat: If a letter from the PBGC was delivered but you didn’t respond, you won’t be in the public database since the PBGC thinks your address is valid. The PBGC plans to remedy that by yearend. You can also go to askebsa.dol.gov for help. The best option: Call one of six regional pension counseling projects affiliated with the Washington-based nonprofit Pension Rights Center (pensionrights.org). The regional offices handle a range of retirement-benefits issues for consumers and act as a liaison with the plans.
Retiree Barbara Burns called one of those offices, the Pension Action Center (PAC) at the University of Massachusetts at Boston, in August. Burns had received a letter earlier in 2017 from a former employer asking her to confirm her address. She mailed a confirmation to the company, but didn’t hear back. The center found that Burns had been eligible for a pension since 2006, but the company said it wouldn’t pay her retroactively. PAC pointed out that failure to pay the benefits would violate pension rules. According to PAC director Jeanne Medeiros, the company responded, saying, “Oh, yeah, we’re changing our policy.”
Medeiros suggests keeping all tax returns and benefits papers. That will help the center prove a claim more quickly and counter any inaccurate information from a plan. Burns’s former employer tells her it will probably start payments on June 1. These include a monthly benefit of $150 and retroactive funds of about $20,000.
To contact the author of this story: Suzanne Woolley in New York at swoolley2@bloomberg.net.
To contact the editor responsible for this story: Dimitra Kessenides at dkessenides1@bloomberg.net.
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