Hello. Is It Me You’re Looking For? Missing Participant Best Practices

by Leslie Thomson

The Employee Benefits Security Administration (EBSA) has developed a list of best practices plan fiduciaries can implement to reduce missing participant issues and ensure participants and beneficiaries receive their plan benefits. According to EBSA, the first step in addressing any problem is knowing there is one. If your plan has one or more of the following “red flags,” you potentially have a missing participant issue:

• More than a small number of missing or nonresponsive participants.
• More than a small number of terminated vested participants who have reached normal retirement age but have not started receiving their pension benefits.
• Missing, inaccurate, or incomplete contact information, census data, or both (e.g., incorrect or out-of-date mail, email, and other contact information, partial social security numbers, missing birthdates, or missing spousal information).
• Absence of sound policies and procedures for handling mail returned marked “return to sender,” “wrong address,” “addressee unknown,” or otherwise, and undeliverable email.
• Absence of sound policies and procedures for handling uncashed checks (as reflected for example, by the absence of an accounting journal or similar record of uncashed checks, a substantial number of stale uncashed distribution checks, or failure to reclaim stale uncashed check funds in distribution accounts).

Many of the following “best practices” are used by well-run plans to avoid missing participant issues. Not all of these practices will apply to every plan. As such, plan fiduciaries should evaluate which practices will yield the best results in a cost effective manner for their plan’s particular participant population. Plan fiduciaries should also consider the size of a participant’s accrued benefit or account balance as well as the cost of search efforts.

• Contact participants, both current and retired, and beneficiaries on a periodic basis to confirm or update their contact information. Well-run plans regularly reconfirm that the information in their possession is accurate and periodically remind participants to advise the plan of any changes in contact information.
• Maintain and monitor an online platform participants can use to update contact information for themselves and their spouses/beneficiaries, if any.
• Provide prompts for participants and beneficiaries to confirm contact information upon login to online platforms.
• Regularly request updates to contact information for any beneficiaries.
• Regularly audit census information and correct data errors.
• In the case of a change in record keepers or a business merger or acquisition by the plan sponsor, address the transfer of appropriate plan information (including participant and beneficiary contact information) and relevant employment records (e.g. next of kin information and emergency contacts). EBSA has found that in the context of an acquisition, merger, or divestiture, well-run plans make missing participant searches of plan, related plan (e.g., health plan) and employer records (e.g., payroll records) part of the collection and transfer of records.
• Use plain language and offer non-English language assistance when and where appropriate.
• State upfront and prominently the purpose of the communication (e.g., eligibility to start payment of pension benefits, a request for updated contact information, etc.).
• Build steps into the employer and plan onboarding and enrollment processes for new employees, and exit processes for separating or retiring employees, to confirm or update contact information, confirm information needed to determine when benefits are due and to correctly calculate the amount of benefits owed, and advise employees of the importance of ensuring that the plan has accurate contact information at all times.
• Communicate how the plan can help eligible employees consolidate accounts from prior employer plans or rollover IRAs.
• Clearly mark envelopes and correspondence with the original plan or sponsor name for participants who separated before the plan or sponsor name changed, and indicate that the communication relates to benefit rights.

The following best practices concern locating missing participants. Again, plan fiduciaries should determine which practices are best for their plans.

• Check related plan and employer records for participant, beneficiary and next of kin/emergency contact information. While the plan may not possess current contact information, it is possible that the employer’s payroll records or the records maintained by another of the employer’s plans, such as a group health plan, may have more up-to-date information. If there are privacy concerns, the person engaged in the search can request that the employer or other plan fiduciary forward a letter from the plan to the missing participant or beneficiary.