The United States Department of Labor (DOL) takes the problem of missing pension plan participants very seriously.

As such, the regional offices of the Employee Benefits Security Administration (EBSA) have recently launched a program called the Terminated Vested Participants’ Project (TVPP), designed to audit and help manage the voluntary compliance efforts undertaken by plan fiduciaries.

On January 12, 2021, the EBSA issued its Compliance Assistance Release No. 2021-01. The goal of the memo was to inform Plan fiduciaries and others responsible for the administration of employee benefits that the EBSA is seeking their compliance in minimizing the number of missing Plan participants. The main objective of the EBSA in this process is to ensure that eligible employees (and their beneficiaries) receive their promised benefits.

Systematic challenges plague many plans

Those companies that typically struggle with high numbers of missing participants often do so because of a lack of disciplined protocol that enables them to remain in contact with employees once they leave the organization.  Recognizing that maintaining accurate records and communication with previous employees must be treated with a high level of importance can put the company and the plan administrators on the right path.

Solutions that are successful

While there is no one easy practice for those responsible for administering retirement plans to utilize in order to stay connected with past participants/ employees, there are several suggestions that can help mitigate the situation.   

The first step is to create a consistent consensus process for updating contact information for all plan participants, including current and past employees. While this can be a cumbersome task, the results pay off. Every employment record must include accurate home and business addresses; all telephone numbers, including those used for business, home and mobile; email and social media contact information; and emergency contact information.

Without access to this basic data, the plan administrator cannot keep in touch once the employee has left the organization. Red flags should be triggered whenever mail is returned, checks are uncashed, or there is no response to phone calls and emails. In these instances, there should be immediate follow up – before the trail grows cold.  This may mean using free online search engines, the US Post Office, social media platforms such as LinkedIn or Facebook, reaching out to emergency contacts, previous colleagues and fellow employees, or to the Plan beneficiaries. The administrator has responsibility for embracing these and other initiatives that can help to find missing participants. There is also the National Registry of Unclaimed Retirement Benefits where administrators can register missing participants. With today’s technology tools and a myriad of sites that share public information, this is one area that companies could be using more efficiently.   

The second step is to keep the information relevant. This requires the administrator to send out quarterly or semi-annual requests for updates stating what the notice is for and the intent behind keeping current records. This essential outreach serves as a reminder to the employees that they have benefits that may go unclaimed if they cannot be contacted.  Clearly marking the envelop regarding the contents within or finding other ways to avoid looking like an advertisement or junk mail, can also encourage the recipient to open the envelope and respond to the request.

The third and final step is to document all procedures, indicating what steps have been taken by the employer to ensure complete accuracy of all employment records as well as to indicate when timely changes have been made as details are updated.    

The focus of EBSA investigations

As the Terminated Vested Participants Project audits begin, employers should be aware that the EBSA will be especially targeting those circumstances where they discover a consistent lack of current contact information for terminated vested participants and beneficiaries - and the resulting loss of those employees receiving their benefits in a timely manner. 

It is expected that proper plan administration will include, at a minimum, accurate record keeping and well-outlined and well-executed procedures for locating missing participants and beneficiaries, addressing uncashed distribution checks, and adequately informing and educating all employees regarding their right to payment of benefits earned.

The burden is on the Plan Administrators to demonstrate their good faith in keeping in touch with past employees in a meaningful way and doing their best to distribute employee benefits as appropriate. 

Please feel free to contact Liz Harper with any questions. 

Liz Harper, CPA, Member of the Firm and Director of the Employee Benefit Plans Audit and Consulting Practice

Some of the information included here was researched at US Department of Labor – Employee Benefit Security Administration