Missing Participants: A Refresher

John Iekel

Missing participants pose a challenge for a variety of reasons, and a plan has certain obligations—but also options—concerning them. Of course, the best option is to avoid having any missing participants in the first place. That was the take of Kelsey Mayo, ASEA Director of Regulatory Policy and Partner at Poyner & Spruill LLP, who in a recent webinar concerning plan freezes and terminations in the context of current circumstances and regulations addressed missing participants and what to do about them.

In fact, tracking participants is a fiduciary duty, Mayo warned. It’s part of meeting the responsibility of administering a plan for the exclusive benefit of participants and behaving as a prudent expert. “This includes making reasonable efforts to locate participants or beneficiaries to make distributions,” she said.  

And the DOL means business, Mayo indicated, observing that its nationwide enforcement project continues. “Plan administrators should be diligent about searches,” she said. Further, she noted that the DOL in recent guidance outlined best practices for fiduciaries and has enunciated its enforcement policy that authorizes the use of the PBGC missing participant program.  

Red Flags

Mayo identified some red flags that may indicate that missing participants are becoming a problem: 

• more than small number of missing/unresponsive participants;
• more than a small number of terminated vested participants, who despite reaching the normal retirement date, have not started receiving benefits;
• missing, inaccurate or incomplete contact information, census data or both;
• absence of sound policies and procedures for handling mail returned marked “return to sender,” “wrong address,” “addressee unknown,” or otherwise undeliverable; and 
• lacking sound policies and procedures for handling uncashed checks; for instance, absence of accounting journal/record of uncashed checks, a substantial number of stale uncashed distribution checks, or failure to reclaim stale uncashed check funds in distribution accounts. 

Missing Participant Searches 

Mayo offered some strategies for conducting searches to find missing participants. 

• Check related plan and employer records for contact information and next of kin/emergency contact.
• Check with designated plan beneficiaries (e.g., spouse, children) and the employee’s emergency contacts.
• Use free online search engines, public record databases (real estate mortgages, taxes and licensing organizations), obituaries and social media.
• Use a commercial locater service, a credit-reporting agency, or a proprietary internet search tool.
• Attempt contact via USPS certified mail, or through a private delivery service with tracking features.
• Attempt contact via other available means such as email addresses, telephone numbers and social media.
• If contacts remain unresponsive over a certain period, try a death search.
• Contact colleagues of missing participants; e.g., by contacting employees who worked in the same office, or by publishing a list of “missing” participants to current employees, or in communications with other retirees who are already receiving benefits.
• For union employees, use union communications to find missing retirees. 
• Register missing participants on public and private pension registries with privacy and cyber security protections, and publicize the registry through emails, newsletters and other communications to existing employees, union members, and retirees.

Best Practices to Avoid Missing Participants 

Mayo outlined a variety of ways that a plan can head off the problem and avoid having missing participants in the first place.  

Maintaining Accurate Census Information. Mayo suggested that there are a variety of steps that can be taken to make sure that census information about employees is accurate:

• Periodically contact participants, current and retired, and beneficiaries to confirm or update their contact information (i.e., addresses, phone numbers, social media contact information, next of kin/emergency contact info).
• Include contact information change requests in plan communications.
• Flag undeliverable mail/email and uncashed checks for follow up.
• Maintain and monitor online platform for plan that participants can use to update contact info.
• Provide prompts for participants and beneficiaries to confirm contact info upon login to online sites.
• Regularly request updates to beneficiary contact information.
• Conduct regular audits of census information and correction of data errors.
• During  merger, acquisition or vendor change, address the transfer of appropriate plan information (including participant and beneficiary contact information) and relevant employment records (next of kin, emergency contacts). 

Use Effective Communication Strategies.  It’s important to effectively communicate, not only with those who may have contact with missing participants, but also with participants while they are still present in order to head off potential trouble. To that end, she suggested the following steps. 

• Use plain language and offer non-English language assistance.
• Encourage contact through plan sponsor website and toll-free numbers.
• Build steps in employer and plan onboarding and enrollment processes for new employees, and exit processes for separating or retiring employees.
• Communicate information about how 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 plan or sponsor name changed. 

Documenting Procedures and Actions. Taking action to document procedures and actions can not only prevent problems, it also could help a plan and sponsor to learn from past mistakes or omissions and prevent further trouble. For instance, Mayo suggested, one can: 

• Reduce the plan’s policies and procedures to writing.
• Document key decisions and steps and actions taken to implement policies.
• Work with the plan recordkeeper to identify and correct shortcomings in the plan’s recordkeeping and communication practices, including establishing procedures for obtaining relevant information held by the employer.