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Cents and Sensibility Guy Steele |
Make sure you
don’t lose track
of pension benefitsIf you visited a store or a restaurant and you left your purse or wallet behind, you'd certainly go back and get it. So wouldn't you do the same for a whole lot more money that you may have abandoned with a former employer?
You would -- if you knew about it.
Right now, millions of dollars in pension funds are waiting to be claimed by their rightful owners. Are you one of them?
In recent years, defined contribution plans, such as 401(k)s, have become the dominant type of retirement account. But for a long time, pension plans -- also called "defined benefit" plans -- were the chief retirement savings vehicle for millions of employees. And a lot of these people separated from their employers without ever receiving their pensions.
How can this happen? It's not as hard as you might think. You work for a place for a few years, leave your job and forget you left behind a pension. Or the company you worked for went out of business, or merged with another company, and you thought the pension went with it. But the fact is that it's never too late to seek pension money that is owed you -- and, if you're lucky, you might even get it.
Where should you look? You can start by contacting the Pension Benefit Guaranty Corp., a federal government agency that insures the minimum pension benefits of approximately 35,000 private companies. Since 1974, all companies with 25 or more participants in defined benefit plans have been required to register with the PBGC. If a company ends a pension plan that isn't fully funded, the PBGC takes over as plan trustee and guarantees basic benefit payments. The PBGC also tracks benefits of employees who can't be located.
If you think you may have some pension funds somewhere out there, contact the PBGC through its web site at www.pbgc.gov. You'll be able to enter information about your former employer's pension plan and, hopefully, start the process toward garnering your missing money.
Contacting the PBGC may be helpful if you've lost touch with your pension information. But, if you're still employed by the company that will pay your pension, or if you've recently left it, you'll want to stay current on your benefits. That's why you should request an "individual benefit statement" on the status of your pension. This statement should contain the status of your pension, when you're eligible to retire and an estimate of how much your pension will be. Request your statement in writing from the plan administrator -- not a company official. If you don't get the statement within a few weeks, be persistent -- you have a legal right to the information within 30 days.
At the same time you request your benefit statement, ask for copies of all benefits statements in your file and all pension plan documents, including the "trust documents" that show how the plan is administered.
You worked hard to earn your pension -- so do whatever it takes to collect your benefits. You may have to be proactive to get what you deserve, but it's well worth the effort.
See the Columnists section for some past articles.
Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com