Taking Care of Mom and Dad: Missing Plans
What happens if one or both of your parents worked for a company, became vested in a pension plan and now can't find the company to collect their benefits? Let's say your dad worked for a me-dium-size company a long time ago and now that he's ready to retire, he can't seem to locate the company. Does he still have his pension? Will he ever be able to find it? And if not, then where did it go?
Thousands of retired workers in the U.S. are not getting the pension payments they deserve because they don't know where to look. They may have worked for companies that moved, consolidated, became another company, merged, divided, gone bankrupt or simply closed its doors and disappeared.
In some cases, pension plans are lost; but, in others, money is sitting safely in a fund, waiting for a worker or surviving spouse to claim it. Tracking down a pension fund can be hard work; but, for those owed money, it's a worthwhile endeavor.
Hunting down a lost or missing pension plan involves many steps, including: determining if it's worth looking; organizing your paperwork and dates of employment; contacting various sources and following through the leads; and dealing with what you find at the end of your hunt.
Making sure that your parents qualify for a pension (that is, they are vested) is the first step. Most pension plans require at least five years of employment. But, prior to the mid-1980s, plans typically required 10 years. If your parents think they qualified for a pension at a job they worked prior to the mid-1970s, they may have had to work many years to get one. Before 1976, plans could require that they worked for the same employer until they retired.
People have more rights since ERISA was enacted. But rules that define the plan when a worker leaves determine whether a worker has a pension or not. If your parents left jobs before 1976 -- before ERISA took effect -- they could be out of luck. So, knowing when they worked, how long they worked and the requirements for their pension plans is important.
Knowing what to expect when looking for lost benefits also helps. Here's what someone can expect to find with regard to benefits:
- an inactive plan (the company may have changed, but the plans may have been legally transferred to new managers who are now obligated to pay out benefits due);
- a plan that bought an annuity from an insurance company, which undertook the obligation to pay annuities to everyone entitled to benefits under the plan;
- a plan that was transferred to a bank or a mutual fund;
- a plan that was taken over by the PBGC, which then pays benefits up to a certain amount;
- a plan that was terminated by the employer with benefits paid to people who could be found; and
- a plan that has vanished -- along with its monies.
Tracing the history of a pension fund can be exhausting. If your parents worked for companies that no longer exist and are hard to pin down, finding the fund is frustrating. They may have worked for these companies back when private pensions were unregulated. Only since 1974 have broad protections emerged to make sure that such funds remain managed and solvent. The IRS has also taken a role in the regulation of pensions.
Once you gather and organize any documents you find that reflect your parents' possible pension plans, keep everything in one place. These are valuable documents.
Your parents can contact the Social Security Administration (SSA) to obtain copies of their earnings records. This can help determine their employers' federal ID number, which in turn can aid in your hunt.
To request an earnings record, call 1.800.772.1213 and ask for Form SSA-7050-F3, otherwise known as Social Security's "Request for Social Security Earnings Information" document. Expect this kind of inquiry to take at least six weeks.
Also, each year pension plans are required to report to the SSA any benefits that have been earned by workers leaving the job. When those workers apply for Social Security benefits, the SSA is supposed to remind them of their old pensions. This notice doesn't always work as smoothly as it should, but the SSA does keep records of employers and pension plans.
Other useful resources for hunting down a pension plan include:
- U.S. Department of Labor. Particularly, the Pension and Welfare Benefit Administration (PWBA)'s Division of Technical Assistance & Inquiries (202.219.8776). There are also 15 field offices to provide assistance to people who are having problems with their pensions.
- Pension Benefit Guaranty Corporation (PBGC). This agency has a computerized list of individuals who are entitled to benefits from pension plans that it has taken over but who can't be located. They also maintain -- since 1994 -- a pension search program that accepts benefits from terminating defined benefit plans if the plan administrator has been unable to locate all participants.
- Pension Counseling Projects. You may be able to find local counseling services just by looking in the phone book. Several federally-funded agencies have sprouted up since the 1990s through the Administration on Aging.
- Libraries. Never underestimate the power of your local library, as well as the more sophisticated ones that have Internet access and powerful search engines. There are also specialized business libraries throughout the country; and college campuses also have business libraries with helpful tools.
- Internet. The Web can help you access the PBGC's computerized directory at http://search.pbgc.gov. Or you can write to the PBGC Pension Search Program at 1200 K Street NW, Suite 930, Washington, D.C., 20005-4026.
Note: The PBGC provides short cuts for certain individuals. If your parents had a pension plan that closed down after July 1, 1974 and the sponsor of the plan was a private company that was not a religious organization and was not a professional office that employed fewer than 25 people, then locating the plan should be easy. The PBGC won't, however, be able to help your parents if their plan was paid for only by union dues or was administered by a government agency.
If your parents can contact former co-workers to ask them about pension plans, your parents may be able to learn what happened to the company...and their benefits. If their former co-workers are receiving pension benefits, ask them where the checks are coming from. If they worked for a company that had unionized workers, they may be able to obtain information from the union. And, if they are confused about which union it was or how to locate it, they can contact their state's labor federation, local Chambers of Commerce where the company used to be and historical societies for help.
A plan's annual financial reports may identify the plan's administrator. These reports get filed with the PWBA about two years after the year that they cover, and they are kept by the PWBA for six years. Calling the PWBA's Division of Technical Assistance & Inquiries is a start.
Because state governments require annual reports from corporations, contacting the Secretary of State's office for guidance is helpful. By calling the main switchboard, you can get the name and number of the agency that collects these reports. The office of a county or municipal recorder of deeds can also lead to clues. And, don't forget: if the company was publicly-traded, required Securities and Exchange Commission (SEC) filings would list company information.
What to Look for Among Valuable Documents
- A notice that your parents are vested in a plan;
- A benefit statement;
- An exit letter, received when someone leaves a company, noting participation in the plan;
- A summary plan description showing the plan's rules;
- Any documents that show the full official name of the company and its IRS ID number;
- Any documents that show period of employment and earnings; and/or
- Old pay slips and W2 forms.
When all is said and done, and you've come to the end of your search, you may have found one of the following:
- the plan's administrator;
- the name of the insurance company where the funds reside; or
- the PBGC if it took over the pension plan's obligations or the plan was terminated and its plan administrator used the PBGC's missing participants program.
