Jun 22, 2017

The Case of the Lost Pension Benefit

By Byron Ellis

We were sitting with a new client detailing their assets. They hoped to retire in a few years and hired us to help them get there. All of a sudden he remembered one of his first jobs and had a faint recollection of having some sort of a pension plan at that job. (A pension plan is a type of plan where your employer sets aside dollars so that at some future date you have a right to monthly income or in some cases a lump sum). He had no documents with him so when he left our office he had a job to do…find that pension.

We were not too worried.

Our new client, however, was a little worried that he would never see this benefit or income again. In 1974, the government set up something called ERISA (Employee Retirement Income Security Act). Basically the new law gave more power to the government to supervise and enforce “pension promises” and protect the employees. Our client’s pension benefit was most likely out there somewhere and we just needed to find it.

What could have happened to an old pension?

If the company he had worked for was still in existence, it may be as simple as a phone call. But, according to the PBGC website (Pension Benefit Guarantee Corporation), sometimes things happen which can create some difficulty in finding lost pension benefits. If the original company has reorganized the pension may now sit with the new company. The plan may have been purchased by an insurance company that now has the obligation to pay the benefits. If the original company failed, the plan may have been taken over by the PBGC which now will pay out the pension benefits (up to certain maximum limits). Some companies decide to terminate their plans and pay out the benefits to those employees that they can find. If you are someone that they did not find, they could have turned over your benefit to the PBGC. Finally, and this is the worst case scenario, it is possible that your prior employer simply terminated the plan and did nothing. While this may be illegal, it is still possible.

How can you find an old pension?

Knowing that you can “lose a pension” for multiple reasons like a company going bankrupt, changing names, a pensioner changing addresses, a merge, a purchase, a sell, and more, how do you go about finding a lost pension? The PBGC has set up a website to help recover lost pensions. Head to Pension Benefit Guaranty Corporation and then select “Find An Unclaimed Pension”. You will then be able to search using your name, company name or company state. It is actually fairly easy. I did some digging and found 262 lost pensions from Braniff, 1,126 from Fluor and 626 from Enron. If you find one that may be yours, you will be asked to enter some additional information and then someone will contact you.

Luckily, for our client he didn’t need to search too far to find his lost pension. We still did a search on the website just to make sure. Why don’t you take a few minutes to search for your name? You never know what unclaimed benefits might be out there.

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