Missing retirement plan participants: DOL red flags and recommendations
The first step in addressing any problem often is knowing that there is one.
Retirees often miss out on all of the benefits that might be available to them because they don’t know their pension is available or don’t understand the consequences of failing to respond to plan communications. The Employee Benefits Security Administration of the U.S. Department of Labor is working to change that.
The first step in addressing any problem often is knowing that there is one. The agency has learned from its experience and from plan sponsors that the following red flags often are warnings or indicators of a problem with missing or nonresponsive participants:
- More than a small number of missing or nonresponsive participants.
- More than a small number of terminated vested participants who have reached normal retirement age but have not started receiving their pension benefits.
- Missing, inaccurate or incomplete contact information, census data or both.
- Absence of sound policies and procedures for handling mail returned marked “return to sender,” “wrong address,” “addressee unknown” or otherwise undeliverable email.
“A common characteristic of plans with low numbers of missing and nonresponsive participants is that staff are committed to making sure that plan records are complete and up to date and to proactively taking steps to ensure that participants and beneficiaries get the benefits they have earned in a timely fashion,” according to the agency.
“Those plans use best practices as part of their ongoing culture of fiduciary compliance rather than just as one-time or sporadic fixes.”
Practices used by well-run plans to connect participants and beneficiaries with their hard-earned benefits include the following:
- maintaining accurate census information for the plan’s participant population
- implementing effective communication strategies
- conducting missing participant searches
- documenting procedures and actions
“Not every practice is necessarily appropriate for every plan,” the agency said. “Responsible plan fiduciaries should consider what practices will yield the best results in a cost-effective manner for their plan’s particular participant population. In deciding what steps are appropriate, plan fiduciaries should also consider the size of a participant’s accrued benefit and account balance as well as the cost of search efforts. The specific steps taken to locate a missing participant or to obtain instructions from a nonresponsive participant will depend on facts and circumstances particular to a plan and participant.”
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