Patrick DiCarlo, counsel in the firm’s Employee Benefits & Executive Compensation Group, spoke with PLANSPONSOR on the growing number of claims for pension benefits that were paid or rolled over decades ago by former employees who either don’t recall receiving or rolling over benefits or who are questioning the amount of benefits they received.
DiCarlo explained that a contributing factor is the number of Baby Boomers retiring and the span of time over which records have not been retained or may have been lost. Adding defined benefit plan participation when individuals file for Social Security benefits also boosts the trend.
“Along with estimated Social Security benefits, the administration is including notification of plans in which individuals may have participated,” he says. “Participants get this statement and think they’re owed a benefit, but the employer may not even have a record of the individual being a participant.”
“Obviously, plan sponsors’ first line of defense against such claims is to retain good records, but at this point, that ship has already sailed,” DiCarlo says. “So, plan sponsors should have in place a good administrative process. Require individuals to show proof other than the Social Security notice that they have a claim.
He also suggests that plan sponsors use a “pattern and practice” type evidence if they do not have original plan documentation showing someone was paid.
“If [a plan sponsor] can show its normal procedures somehow document a payment was made, even if it doesn’t have a copy of a canceled check or benefits package anymore, it can say our process results in the record showing if it exists.”