Tracking Down Your Long-Lost Pension Payments
At 45, James Vandeputte is still a long way from retirement. But, wisely, he's thinking ahead.
He knows he is entitled to a traditional pension with monthly payments based on his work for an employer he left eight years ago. But he wonders how hard it may be to collect in 20 years or so when he's ready to retire. When he's ready to draw the pension, "do I just start making phone calls" to the previous employer? he asked.
"I can't imagine them notifying me, saying, 'We just noticed you turned 65,' " said Vandeputte, who works for the Bureau of National Affairs making sure information for its tax-practice series is accurate and up-to-date.
And he's probably right, said Ellen Bruce, director of the New England Pension Assistance Project.
Bruce knows a lot about this subject. She and her staff wrote the Pension Benefit Guaranty Corp.'s booklet "Finding a Lost Pension," and they regularly perform detective work for clients trying to find former employers who owe them money.
"We did not find any plan that had a regular system to send notices to people when they turned 65," said Bruce about the research the organization has done. Although traditional plans -- also known as defined-benefit plans -- have a fiduciary obligation to pay benefits, they don't have to chase down potential recipients. Previous employees potentially owed benefits may have died, or they may be working still, she noted. And, until beneficiaries collect the money, it stays in the plan, so employers have no incentive to track them down.
"At this point, it's in the lap of the individual to contact the plan when you're ready to retire and collect under the plan," Bruce said.
If you wait long enough, though, the company might find you.
Karen W. Ferguson at the Pension Rights Center said the law requires plans to start making payments to retirees at age 70 1/2 . Many companies hire private firms to look for lost participants to satisfy the requirements of the law.
Some companies terminate their plans and turn over their obligations to the federal PBGC in the course of filing for bankruptcy protection. The PBGC has a Missing Participants Program to help it find participants in terminated, single-employer pension plans it has taken over, Ferguson said. The PBGC, created in the 1970s, collects insurance premiums from corporations, invests them and uses the proceeds to provide pensions to workers whose pension plans have tanked.
The Missing Participants Program will be expanded to help find participants in defined-contribution retirement plans such as 401(k)s and in multi-employer pension plans.
The U.S. Administration on Aging helped create the New England Pension Assistance Project and five similar projects that provide assistance to workers in 25 states (though none serves the District, Maryland or Virginia). They help workers track down pensions and prove that they are entitled to benefits. But even if you don't have access to one of the centers, there are resources that can help you get at your money.