Track­ing down that old pen­sion or 401(k)? Wear sturdy shoes

Track­ing down a plan from a for­mer em­ployer can be dif­fi­cult “It’s a vast prob­lem that has a huge im­pact”

Bloomberg Businessweek (Asia) - - CONTENTS - −Carol Mat­lack

As a baby boomer, I joined the la­bor force when many jobs still came with an old-style pen­sion, the kind that pays a fixed monthly sum in re­tire­ment. Al­though pen­sion plans have been largely phased out in fa­vor of 401(k) and in­di­vid­ual re­tire­ment ac­counts, those of us who paid into them are en­ti­tled to the ben­e­fits we ac­crued.

Get­ting our hands on the money may not be easy, as I re­cently learned when I de­cided to take in­ven­tory of my re­tire­ment as­sets. Job-hop­ping work­ers, cor­po­rate up­heaval, and spotty record keep­ing have left bil­lions of dol­lars owed to Amer­i­cans in limbo. “It’s a vast prob­lem that has a huge im­pact on re­tire­ment se­cu­rity,” says Jeanne Medeiros, di­rec­tor of the Pen­sion Ac­tion Cen­ter, a re­search group at the Univer­sity of Mas­sachusetts Bos­ton. She es­ti­mates un­claimed pen­sion ben­e­fits could to­tal as much as $8 bil­lion an­nu­ally.

When I left a job at Na­tional Jour­nal mag­a­zine in Wash­ing­ton in 1995, I was of­fered a choice be­tween stay­ing in the com­pany pen­sion plan or tak­ing a $19,100 lump-sum pay­ment. I opted for the pen­sion, care­fully fil­ing away the pa­per­work I got from HR, which es­ti­mated I’d get $436 a month start­ing at age 65. That doesn’t sound like much, but it would to­tal more than $100,000 if I lived 20 years af­ter re­tire­ment.

Na­tional Jour­nal had been owned by the Times Mir­ror me­dia group when I worked there, but was sold in 1997. I fig­ured the new owner’s HR depart­ment would still have the pen­sion records. It didn’t and had no idea who did. Times Mir­ror was even­tu­ally ac­quired by the Tribune Co., which split into two com­pa­nies in 2014. News re­ports at the time said Tribune had more than $90 mil­lion in un­funded pen­sion li­a­bil­i­ties. Oh dear.

I tried the Pen­sion Ben­e­fit Guar­anty Corp., a fed­eral agency that takes over pen­sion plans if they go bank­rupt. It’s also a repos­i­tory for un­claimed ben­e­fits owed to peo­ple whose for­mer em­ploy­ers have ter­mi­nated their plans. The PBGC has an on­line data­base of some 35,200 peo­ple who are col­lec­tively owed $351.5 mil­lion. I wasn’t in the data­base—which was frus­trat­ing, but also good news, since it meant my pen­sion plan hadn’t gone bust or shut down.

I then turned to the Pen­sion Rights Cen­ter, a non­profit that has coun­sel­ing cen­ters in 30 states to help peo­ple with re­tire­ment-ben­e­fits prob­lems. Bad luck: Nei­ther the District of Columbia, where I had worked, nor Vir­ginia, where I lived at the time, are among the ar­eas it serves. Next stop was the Depart­ment of La­bor’s Em­ploy­ment Ben­e­fits Se­cu­rity Ad­min­is­tra­tion, which helps peo­ple lo­cate pen­sions and 401(k) ac­counts. I filled out a re­quest form on its web­site. A few weeks later, a rep­re­sen­ta­tive left a mes­sage say­ing she was still search­ing.

In the mean­time, though, I’d had a break­through: A for­mer col­league re­mem­bered that an­other co-worker had opted to re­main in the old pen­sion plan back in 1997. I lo­cated him, and he told me he was now re­ceiv­ing monthly re­tire­ment ben­e­fits via fund man­age­ment gi­ant Van­guard. I called Van­guard, pro­vided my So­cial Se­cu­rity num­ber, and—bingo!

Later, I learned that my pen­sion had been folded into a Times Mir­ror plan af­ter the 1997 sale. Tribune, af­ter ac­quir­ing Times Mir­ror, had kept that plan sep­a­rate from its trou­bled pen­sion hold­ings (what luck!) and hired Van­guard to ad­min­is­ter it. A let­ter ap­pris­ing me of all th­ese changes was mailed to an ad­dress where I hadn’t lived for 17 years. Such sit­u­a­tions are “not un­com­mon,” Emily Far­rell, a Van­guard spokes­woman, told me, not­ing that plan par­tic­i­pants “move, marry, change names, etc., and of­ten don’t no­tify the plan spon­sor.”

Track­ing down an er­rant 401(k) can be even more chal­leng­ing, ac­cord­ing to John Turner, di­rec­tor of the Pen­sion Pol­icy Cen­ter, an ad­vo­cacy group in Wash­ing­ton. The La­bor Depart­ment says em­ploy­ers aban­don some 1,650 401(k) plans ev­ery year. Over the past decade, that’s left in limbo more than $8 bil­lion owed to peo­ple who left their ac­counts be­hind when they changed jobs. Even when plans re­main ac­tive, peo­ple some­times for­get about their ac­counts or die with­out leav­ing records for heirs. The La­bor Depart­ment can some­times help lo­cate miss­ing

401(k) sav­ings, but not al­ways. Un­claimed 401(k) ac­counts of­ten sit in fi­nan­cial in­sti­tu­tions for years and even­tu­ally are turned over to state aban­doned-prop­erty agen­cies, Turner says. “It’s kind of a black hole.”

Turner’s group has urged the govern­ment to set up a search­able registry of un­claimed pen­sions and re­tire­ment ac­counts na­tion­wide, as Bri­tain and Aus­tralia have done.

One easy way to keep tabs on a pen­sion or 401(k) when you change jobs is to roll the money over into an IRA or your cur­rent em­ployer’s 401(k). There’s a down­side, though. A study last year by the Cen­ter for Re­tire­ment Re­search at Bos­ton Col­lege found that an­nual re­turns on IRAs av­er­aged only 2.2 per­cent from 1999 to 2012, com­pared with 3.1 per­cent for 401(k)s and 4.7 per­cent for tra­di­tional pen­sion plans. Higher man­age­ment fees ac­count for at least some of the dif­fer­ence, the study found.

The bot­tom line Un­claimed U.S. pen­sion ben­e­fits may to­tal as much as $8 bil­lion an­nu­ally. Aban­doned 401(k)s leave bil­lions more in limbo.

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