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  /  News   /  : Billions of lost retirement dollars are getting harder to find

: Billions of lost retirement dollars are getting harder to find

People hunting for old retirement plans are facing new obstacles.

Fraud concerns have prompted one federal agency, the Pension Benefit Guaranty Corp., to take down a public database that previously helped retirement-plan participants track down their benefits, a PBGC spokesperson said in a statement to MarketWatch. Many people searching for lost retirement money have also lately had trouble obtaining key information that the Social Security Administration typically provides about private retirement benefits, according to pension counselors who assist plan participants.

The new challenges come at a time when the pandemic is expected to exacerbate the longstanding problem of retirement plan sponsors losing track of their participants. COVID-related job loss, combined with failing businesses struggling to keep updated participant records, may lead to more “missing” participants—those whom plan sponsors can’t locate when it comes time to claim benefits, according to a May report from the Government Accountability Office.

The pandemic-related problems and diminished access to retirement-plan search tools mean that workers may struggle to locate their retirement money when they need it most, says Jennifer Anders-Gable, managing attorney at the Western States Pension Assistance Project, a pension counseling organization.

Regulators and lawmakers in recent years have increasingly focused on connecting workers with unclaimed retirement money. The Labor Department’s Employee Benefits Security Administration, which oversees private retirement plans, has pushed plan sponsors to maintain accurate participant records. The government agency’s enforcement efforts in fiscal year 2021 helped defined-benefit pension plan participants collect more than $1.5 billion worth of benefits owed to them, up from about $327 million in fiscal 2017. Several bills introduced in Congress this year call for the creation of a retirement savings “lost and found,” an online plan registry where pension and 401(k) participants could search for their plans.

‘We need an Ancestry.com for pension plans’

Job-hopping, corporate name changes, mergers, plan terminations and other factors contribute to workers and retirement plans losing track of each other, experts say. There is more than $1.3 trillion in “forgotten” 401(k) accounts participants have left behind when leaving an employer, estimates Capitalize, a financial technology company focused on retirement-account rollovers. 

“We need an Ancestry.com for pension plans” to help connect the dots, says Tom Reeder, former PBGC director and board member of the Pension Rights Center, a nonprofit consumer group.  

Although plan administrators are obligated to keep up-to-date participant records, some pension plans have records with obvious data flaws—such as “John Doe” placeholder names—or simply delete names of unresponsive participants, according to the Labor Department.

“The pandemic and diminished access to retirement-plan search tools mean that workers may struggle to locate their retirement money when they need it most. ”

The now-defunct PBGC public database was a critical part of the solution, pension counselors say. For people trying to locate lost plans, “a lot of times, the only way to track down the benefit is by going to the PBGC,” says Anna-Marie Tabor, director and managing attorney at the Pension Action Center at the University of Massachusetts Boston. The database included benefits and accounts from terminated plans, and participants could do a quick search to find out whether retirement money was being held for them.

PBGC removed the database from its website in 2020 “to prevent bad actors from using the information to facilitate fraudulent activity,” the PBGC spokesperson said. The agency “is not aware of specific instances of fraud” originating from the database, and there was no security breach involving the online tool, the spokesperson said. Plan participants looking for unclaimed benefits can still call the PBGC for help at 1-800-326-5678.

The demise of the search tool raises questions about legislative efforts to create a more comprehensive, searchable online plan registry. The Retirement Savings Lost and Found Act introduced earlier this year by Massachusetts Democratic Senator Elizabeth Warren and Montana Republican Senator Steve Daines, for example, calls for the PBGC to manage an online searchable database that would help individuals find contact information for their retirement plan administrator.

Asked about the fraud concerns raised by the PBGC, a Daines aide said that the online registry envisioned by the Retirement Savings Lost and Found Act “probably needs to be moved from PBGC” to another agency—potentially the Treasury Department. “Cybersecurity threats are on the rise, and not everyone is as prepared as Treasury,” the aide said.

The struggle to obtain critical plan information from the Social Security Administration

Pension counselors who assist plan participants in roughly a dozen states, meanwhile, say that many of their clients have lately struggled to obtain critical plan information that’s typically provided by the Social Security Administration. The agency sends notices to people who may be entitled to retirement benefits from a private employer, listing the plan name, administrator’s address, value of the account and other details. The notice is generally sent automatically to those claiming Social Security benefits and upon request to others searching for their plan details.

“That form in and of itself is extremely helpful” in some lost pension cases, yet clients since early last year have struggled to get their hands on it, Anders-Gable says. Some clients have faced long delays in receiving the notice or got no response to their request for the information, pension counselors say.

A July report by the Social Security Inspector General examining the agency’s mail processing during the pandemic found that about half of Social Security field office managers reported they were overwhelmed by mail duties, and roughly 20% said they were unable to keep up with the mail. The agency doesn’t have comprehensive policies or management information for mail processing, and without that information, it “cannot know how much unprocessed mail it has, what is in the mail, or how old the mail is,” the report said.

A spokesperson for Social Security says the agency continued its regular mailing and responses to individual requests for the private retirement benefit notice during the pandemic. The agency didn’t respond to a request for comment about the Inspector General’s report.

People hunting for lost retirement money still have access to several resources that may help. In addition to calling the PBGC, plan participants can contact the Department of Labor at 866-444-3272 or www.askebsa.dol.gov/webintake/. At www.pensionhelp.org, a Pension Rights Center site, participants can connect with pension counseling projects covering about 30 states that provide free assistance tracking down benefits.

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