An excellent investigation published by WGBH News in Boston last month highlights the problem of "lost" pensions.
As reporters Liam Knox and Lucas Smolcic-Larson explained, there are $156 billion in unclaimed defined-benefit pensions in the United States. One reason these benefits go unclaimed is that corporate buyouts and restructurings make it hard to for beneficiaries to track down and claim what has been promised to them. And current regulations are inadequate in ensuring a transparent process for making such claims.
The article features the incredible example of Deborah Imondi, now 66, who managed a large corporate pension fund for 25 years until she left in 1984. The bank she worked for went through a series of buyouts and mergers. Bank of America took over the associated pension funds. When Imondi requested pension benefits from Bank of America, the bank claimed it had no record of her pension and referred her to Fidelity, the trustee for Bank of America. Fidelity also claimed it had no record of pension earned by Imondi.
After years of frustration, she contacted the Pension Action Center for assistance. This nonprofit project, based out of the University of Massachusetts, supports individuals in the six states of New England and in Illinois. Individuals who are assisted by this project are represented by attorneys, who provide assistance without compensation.
Imondi, with the assistance of the Pension Action Center, was finally able to receive pension benefits of $291 per month. Imondi knew she was entitled to benefits because she managed the pension benefit program for 25 years. Yet it took her several years to be able to receive benefits she was entitled to.
Unfortunately, corporations with access to the assets associated with these pensions because of mergers and acquisitions don't have much of an incentive to search for the beneficiaries. If the pensions are not paid, the corporations holding the funds benefit from earnings on them.
Federal regulations require employers to perform a "diligent search" before declaring a participant "missing." However, the rules do not specify steps for completing this search. Imondi told the WGBH reporters she received no such communication about her pension! This statement points out the worthlessness of this federal regulation.
Sen. Elizabeth Warren, D-Mass., and Steve Daines , R-Mont., have reintroduced a bill that would require an online registry of all retirement plans. If such a registry is in place, an individual entitled to a pension would have to contact only one source to investigate their pension benefits.
Unfortunately, a safe harbor provision was added to the bill earlier this year that critics say will water down its effectiveness. The provision mandates just two or three required steps for corporations to follow. According to Marc Machiz, former official for the Employee Benefits Security Administration, inclusion of the safe harbor provision would allow corporations to do the "least they can do" to find the missing participants.
The bottom line is that currently there are insufficient regulations in place that protect individuals eligible for pensions when companies have undergone changes in ownership. Fortunately, there are organizations that can assist you without incurring legal expenses. Specifically, the Pension Action Center ( www.umb.edu/pensionaction), a nonprofit organization affiliated with the University of Massachusetts Boston, can help residents of New England and Illinois. The Pension Rights Center ( www.pensionrights.org) can also make referrals to entities throughout the United States that can assist you without incurring legal fees.
If you believe you are entitled to pension benefits, and you are unable to receive satisfaction from your former employer, contact these organizations. Contact your senator and representative and suggest they support the Warren-Daines legislation without safe harbor roadblocks.
(Elliot Raphaelson welcomes your questions and comments at firstname.lastname@example.org.)
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