PBGC holding $300 million in unclaimed pension benefits
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At a time when many Americans are worried about saving enough for retirement, nearly $300 million in pension benefits has gone unclaimed by U.S. workers and retirees.
The Pension Benefit Guaranty Corp., the federal agency that insures pension benefits when companies go bankrupt, said the money belongs to more than 38,000 Americans -- or their surviving spouses -- that the agency has been unable to locate.
The pot of money illustrates the record-keeping challenges that arise when workers frequently change jobs or do not keep records, and when pension funds are transferred through mergers, acquisitions and bankruptcies. The failure of workers and retirees to notify the people who administer retirement plans when they move compounds the challenges.
Workers and retirees also can lose track of 401(k) or similar retirement accounts they had with former employers as well as life insurance policies they bought.
That's why financial planners and benefit experts say it is important to keep a written record of what benefits you are entitled to in a safe place and to update it regularly. They say keeping track of accounts annually, when you change a job or retire is better than waiting until you are incapacitated or letting your family unravel the mess after you die.
"You're going to want to get as much information as you can when you're young, healthy and the companies are around," said Rick Sabo, a Gibsonia financial planner who helps people investigate whether they are missing out on retirement, insurance and other benefits.
The PBGC said 38,259 people are owed benefits valued at $299.4 million. Individuals have unclaimed lifetime pension benefits valued between 12 cents and $815,081. The median unclaimed benefit is $670 -- half are entitled to more and half are entitled to less.
The tally includes 1,874 people who worked for Pennsylvania companies and are entitled to $12.8 million. A list on the agency's website identifying missing workers includes about 150 from Allegheny Health Education and Research Foundation, the hospital whose 1998 bankruptcy led to the creation of the West Penn Allegheny Health System.
PBGC officials said the list includes people they tried to contact by letter, but the letters were returned because of incorrect addresses. It includes some people who are dead as well as some who have not yet claimed their benefits.
"We attempt to find every person," deputy director Candace Campbell said.
The PBGC's list only includes companies that terminated pension plans, either because they went bankrupt or shifted their pension obligations to insurance companies that provide annuity payments to retirees. Other pensions can get lost through mergers and acquisitions, which is why workers and retirees should keep track of what is going on with former employers.
Workers changing jobs or who are retiring should get a statement from the company documenting pension benefits they are entitled to, said Gail Webb, manager of the Ohio office of the Mid-America Pension Rights Project.
The nonprofit is funded by a grant from the U.S. Administration on Aging. Among other things, the group helps workers in six states recover lost pensions.
Ms. Webb said the Ohio office -- which covers Pennsylvania, Ohio and Kentucky -- has recovered more than $24 million in pension and other retirement benefits since 2001.
Earlier this year, the agency recovered $495 in monthly pension benefits for a widow whose husband died in October 2011. The pension plan administrator had told the widow she was not entitled to survivor benefits because her husband had taken a lump sum benefit.
Ms. Webb said once her office got involved, the company discovered the lump sum payment came from a separate retirement plan and that the widow was entitled to a monthly pension worth $5,940 annually.
Companies that sponsor 401(k) plans use search firms or the Social Security Administration to track down missing retirement account holders, said Sandra Pappa, a principal with benefits adviser Buck Consultants, Downtown. She said the Internal Revenue Service used to send letters to people that 401(k) plan sponsors could not find, but that program has been discontinued.
While companies make every effort to find those who are owed money, "It's your responsibility to call the plan sponsor and let them know you've moved," Ms. Pappa said.
Mr. Sabo said a faulty address caused two of his clients to miss out in 2001, when Prudential went public and issued stock to policy holders.
The clients were notified about the stock they were entitled to under four Prudential policies they held, but did not get information about two other policies. Their address on those policies was listed as R.R. 4, Saxonburg, long after R.R. 4 was changed to Mushrush Road. Mr. Sabo located the two policies by checking the Pennsylvania Treasury Department's unclaimed property website -- www.patreasury.gov/unclaimed/search.html.
States, including Pennsylvania, are taking steps to require insurance companies to do more to track down the owners of unclaimed life insurance policies.
Pressed by a task force of state insurance commissioners, five major insurers agreed to use the Social Security Administration's death records to locate missing beneficiaries of life insurance policies. The insurers agreed to proactively search for deceased policy holders and to report to state regulators on their efforts.
A Mt. Lebanon financial planner recommended keeping a list of where you have accounts or policies, the account or policy numbers, and contact information. Robert Nusbaum of Middle America Planning said many attorneys and financial advisers can provide a form to record the information.
"It needs to be kept in a very safe place and only shared with an extremely trusted family member or attorney," he said.
Keeping track of retirement benefits
When you leave a job
• Get a statement from your employer documenting how much of a pension benefit you have earned. Also, obtain a summary plan document, which outlines options for collecting the benefit and whether your spouse can continue to collect after your death.
• Decide whether to keep your 401(k) or similar retirement account with your former employer or to roll it over into an IRA or your new employer's retirement plan.
• Every time you move, tell the your former employer your new address so you will receive notifications if the pension plan is taken over by another company, an insurer or the Pension Benefit Guaranty Corp. Do the same for your 401(k) plan.
• Keep copies of your tax returns or other documents that prove how long you worked for a company and what you were paid. They will help if your employer or pension plan administrator's records contain mistakes. If you do not have them, you can obtain them from the Social Security Administration.
Where to go for help
Pension Benefit Guaranty Corp.
1-800-400-7242 or www.pbgc.gov
This federal agency insures pensions benefits when private sector companies file for bankruptcy. On their website, click on the link to resources to find information on active pension funds, funds taken over by the PBGC and unclaimed pension benefits.
Pension Rights Center
1-888-420-6550 or www.pensionrights.org
This privately funded consumer organization protects and promotes retirement security for workers, retirees and their families. Their website provides tips on keeping track of your pension if you change jobs; documenting your earnings history; and other retirement-related topics.
Mid-America Pension Rights Project (Ohio office)
1-866-735-7737 or www.proseniors.org/oh_pension.html
A nonprofit funded by the U.S. Administration on Aging. Provides information and help on pension benefits and tracking down lost pensions for residents of Pennsylvania, Ohio and Kentucky.
First Published December 30, 2012 12:00 am