Millions of workers don't understand eligibility requirements for early and regular retirement that are described in their pension plan documents. And this has prompted a warning from the General Accounting Office: Ignorance isn't bliss.

"Unless workers obtain, or employers provide, accurate pension plan information before workers make decisions affecting their careers, they may make work and retirement decisions they later regret," the congressional auditing agency said in a report released in August.

"Workers who know the ages at which they will be eligible for full retirement benefits (i.e., normal retirement) or reduced benefits (i.e., early retirement) can make better work and retirement decisions," the GAO told Rep. Edward R. Roybal (D-Calif.), chairman of the House Select Committee on Aging.

In contrast, workers acting on inaccurate information or perceptions "may change jobs or retire earlier or later than they would find optimal had they had better pension information," the GAO said.

A Labor Department advisory group made a similar warning in August after reviewing the reporting and disclosure requirements in the Employee Retirement Income Security Act of 1974 (ERISA). These requirements are intended to assure that participants in pension plans are kept informed about the benefits they are accruing and their rights to them. Only pension plans that comply with ERISA qualify for tax benefits.

The group concluded "that there is an urgent need to regulate benefit reporting promptly so that participants receive adequate information about their benefit rights. Without such information, individuals cannot make informed career decisions, nor can they prepare properly for their financial security and retirement."

The legislative history of the individual benefit reporting and record keeping requirements "indicates that Congress intended that regulations would be promulgated by the secretary of Labor to provide guidance regarding certain provisions of these sections," the group said in a report. "In several instances, the extent to which these provisions apply is unclear in the absence of regulations. Proposed regulations were issued in 1979 and again in 1980 but were never finalized.

"Despite the lack of regulations," the group continued, "it appears that most employers are responding to individual benefit requests. However, without the guidance of regulations, some of the information supplied to participants and beneficiaries may be inaccurate or misleading. In addition, some multiemployer plans have not responded to individual benefit requests at all, as it is not clear that they are required to do so in the absence of regulations."

The group recommends that sponsors be encouraged to give participants an individual status report each year that shows the data listed in the plan's record. This includes such information as the participant's birth date, credited service, salary and vested interest.

For workers who also are stockholders, the importance of the GAO and Labor Department reports should be underscored because of uncertainties in personal financial planning triggered by the October plunge in the stock market.

The GAO's auditors, who said they found little past research on workers' knowledge of their pension plans, focused on the extent of workers' knowledge. They relied primarily on the 1983 Survey of Consumer Finances, or SCF, which was conducted for the Board of Governors of the Federal Reserve System by the University of Michigan's Survey Research Center.

The SCF sought data on workers enrolled in defined benefit plans (in which a formula is used to calculate retirement benefits) and defined contribution plans (in which a formula fixes employer contributions).

"Based on the SCF data," the GAO said, "we estimated that about 25 million U.S. workers were in a defined benefit plan in 1983. About 88 percent of these workers (an estimated 22 million) were in plans with an early retirement option.

"Among the 25 million workers," the report went on, "about 43 percent (an estimated 11 million workers) worked for public employers -- federal, state, or local government; a public or private school or college; or the military."

For a national sample of workers' assets and liabilities, the Research Center collected information from 3,824 households where workers were covered by pension plans provided by 1,012 public and private employers.

For details of the plans, the center relied on the employers' documents, including:

Summary Plan Descriptions (SPDs), which give workers details about the amount of their pension benefits, age and service requirements for receiving the benefits, and conditions that might prevent them from receiving the benefits. Responses to questions put to workers and their spouses. To help ensure accuracy and completeness, center interviewers encouraged the workers to consult their families and financial records.

The auditors did not try to determine why workers didn't know about their pension plans, or the extent to which their ignorance could result in poor career and retirement planning. However, the GAO said, in a 1982 evaluation of 75 plan descriptions conducted for the Labor Department, that 64, or 85 percent, "had errors or omissions concerning one or more key provisions. The description of early retirement benefits was a problem for 20 percent of the plans.

"Frequently, these SPDs omitted the entire early retirement provision," the GAO continued. "Other problems were errors or omissions in describing normal retirement benefits (51 percent of the plans), and errors in defining the normal retirement age, usually omitting this age from the SPD (7 percent)."

Among the report highlights:

Normal Retirement Of the 25 million workers in pension plans, more than 70 percent were incorrect about when they would be eligible for benefits. More precisely, the eligibility dates reported by about 14 million workers differed from plan requirements by more than one year, while four million more didn't know when they would become eligible. Men were 1.4 times more likely than women to know the dates of their eligibility.

Workers who could retire within five years were 1.8 times more likely to know the dates when they would be eligible to leave as were workers who would have to wait more than five years.

Early Retirement

Pension plans covering about 22 million workers offered early retirement. But more than 40 percent of these workers "were either incorrect or did not know about their eligibility for {it}," the report said.

While 12 million workers said correctly that they were eligible, about 75 percent of them were either incorrect or didn't know about the eligibility dates listed in their plans.

Women were from 2 1/2 to five times as likely as men to say they didn't know of their eligibility.

The Labor Department work group identified the following specific problems concerning benefit reporting and record keeping: The data on benefits now provided to plan participants and beneficiaries "may be misleading, inaccurate or incomplete," and, in some cases, "may not even be available." "Individual benefit reporting can be costly to plan sponsors and to plans." "In multiemployer plans, information on past employment for individuals is often unavailable.