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Pension Plan Sponsors Seek to Locate Missing Participants

Pension benefits can go uncollected when retirement plan beneficiaries move to a new employer or fail to register a new home address with their pension plan sponsor. The issue of “missing participants” is gaining national attention as plan sponsors strive to reconnect with those who may be owed payments.


The Pension Benefit Guaranty Corporation (“PBGC”) established a Missing Participants Program in 1994 as part of the Retirement Protection Act. The program seeks to locate plan participants who are owed benefits from fully funded, PBGC-insured defined benefit pension plans that have ended. The plans initially focused on single-employer plans. The “Internet Missing Participant List” is an online search tool maintained by the PBGC that provides information on missing participant names, their associated pension plan, and the dates the pension ended. Participants who believe they are owed benefits from now-terminated retirement plans managed by the PBGC can use this resource in their pursuit of benefit reinstatement.

The PBGC Missing Participants Program is being expanded in 2018 to include terminated defined contribution plans such as 401(k) and profit sharing plans, and small professional service defined benefit plans. PBGC-insured multiemployer plans will also be covered under the new rules. The expanded services are available to qualified plan sponsors on a voluntary basis for plans that terminate on or after January 1, 2018.

While the number of missing participants as a percentage of total PBGC benefit recipients is small, it can still add up to tens of thousands of recipients.

When a participant is determined to be missing, the PBGC advises the plans that it governs to make a diligent effort to find former workers. Plan sponsors often use a locator service to help locate missing beneficiaries. Recent advances in data technology can also contribute to this research.

Plan sponsors that enroll in the PBGC Missing Participants Program must provide the agency with details of benefits owed, including monthly payment amounts, start dates, and beneficiary data. The sponsor can then either provide expected payments to the PBGC, or purchase an annuity to meet individual payment obligations.


MetLife, one of the country’s leading providers of “pension risk transfer” programs, revealed in December that approximately 5 percent of its 600,000 pension participants may be owed back benefits. The company estimates average monthly benefits of $150 per missing participant, with a possible total universe of 30,000 affected beneficiaries. Depending on the duration of the payment gap as measured in months or years, the Wall Street Journal reports that MetLife might owe up to $540 million in back pension payments.

MetLife is one of several leading insurance companies that offers “pension risk transfer” services. This is a widely-used technique in which U.S. employers who sponsor ERISA-qualified pension plans shift responsibility for their retiree pension payments to an insurance company. The move allows employers to limit their pension liabilities, while insurance companies get to expand into a new area of potential growth. Prudential and the British insurer Legal & General Group plc are also active in the pension risk transfer field.

Defined benefit plan participants who are involved in a pension risk transfer program are offered a choice to receive benefits in the form of a lump sum payment, an annuity for lifetime income, or a combination of the two.


Plan sponsors face a related problem when annuitants in payment status die. According to the IRS, benefits that a deceased pension plan participant would have been entitled to are usually paid to the participant’s designated beneficiary as a lump-sum distribution or an annuity according to the terms of the plan.

In order for all benefits to be paid properly upon the death of a plan participant, the beneficiary data must be accurate, and the plan sponsor must be notified in a timely manner of the participant’s death.

Plan sponsors are also vigilant in assessing potential fraudulent activity, such as when the heirs or an estate executor continue to cash benefit checks without reporting the participant’s death. When fraud is determined or suspected, many plan sponsors contact local law enforcement for assistance.

December, 2017

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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