DOL Ramps Up Focus on Benefit Payment Practices of Corporate DB Plans

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A new initiative from the Department of Labor hones in on the benefit payment practices of corporate defined-benefit pension plans.

The initiative originated in the DOL’s Philadelphia office, but may soon be expanded.

From the National Law Review:

The investigations are concentrated on plan procedures in three key areas: (i) locating missing participants, (ii) informing deferred vested participants that a retirement benefit is payable, and (iii) commencing benefit payments when the participant reaches age 70½. The initiative was launched out of the Philadelphia regional office, but the DOL has indicated that it intends to expand the investigation further.

[…]

According to the DOL, it has discovered, among other things, that (i) some plans under investigation have procedures for locating missing participants, but the procedures are not being followed in practice; and (ii) at least a few of the plans seemed to have significant recordkeeping problems and could not verify the age of their participants, with the obvious consequence that the plans could not pay participant benefits when required. A representative from the DOL has said that investigators have found numerous problems with plan records, such as individuals who appear to be over 100 years old with birthdays identified by what are clearly “plug” dates. So far, the DOL has identified more than $500 million in unpaid pension benefits that are owed to participants over the age of 70½.

Read the rest of the detailed analysis here.

 

Photo by TaxRebate.org.uk via Flickr CC License

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