A growing number of pension plan administrators are dealing with with the onerous task of tracking down missing plan members who have retired, according to speakers at an event hosted by the Association of Canadian Pension Management on Wednesday.
The Ontario Teachers’ Pension Plan has 34,000 inactive members for whom it has no address or an incorrect one or who don’t respond to communications.
The burden lies in finding members over the age of 71 who don’t have any data from the last 20 years, said Tracy Abel, senior vice-president of member services at the Ontario Teachers’ Pension Plan, who spoke at an event hosted by the association’s Ontario regional council in Toronto in Wednesday.
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“The vast majority have less than a year of credit in their plan,” said Abel.
“A major percentage of those have less than five days of credit. This is a person who did one day of supply teaching in the ’60s, contributed $3 to us, and we’re trying to find them. So spending money to provide somebody with a cheque for $20 can be challenging.”
She noted searches may not even produce satisfactory outcomes.
“Some of these people, when we do find them, they had passed away and we find the survivor. But if the benefit is that small and we’re finding them later on, they’re not re-opening their estates to accept the benefits,” said Abel.
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According to Abel’s presentation, it costs the Teachers’ plan an estimated $50,000 to $70,000 annually to search for missing members. The pension fund employs staff to seek and maintain correct information but in the past, it has had to hire private detectives to locate missing retirees with large entitlements.
The issue will continue to grow in the next few years with an influx of baby boomers reaching retirement, said Lynda Ellis, senior manager of pension policy at the Financial Services Commission of Ontario.
“From a regulatory point of view, I’m getting a lot of questions over this issue,” said Ellis, who noted the Ontario government “has taken an interest in this topic.”
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According to Ellis, the regulatory body plans to send recommendations to the Ministry of Finance about how to deal with the issue.
She said potential solutions vary and could include the province building a centralized database with the names of lost members, following the Bank of Canada model of writing off small entitlements or enacting a legislation for unclaimed property as British Columbia, Alberta and Quebec have done.
In British Columbia, administrators can transfer unclaimed pension funds to an unclaimed property society. In Alberta and Quebec, they can transfer them to the government.
But until Ontario enacts legislation, plan administrators have a fiduciary duty to find members, said Ariella Fuhrmann, a lawyer and principal at Mercer.
She noted plan sponsors and members aren’t exempt from the responsibility and also have an obligation to ensure their data stays accurate.
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Fuhrmann advised plan administrators and sponsors to:
- Be proactive and encourage members to update personal data, including spousal and beneficiary designations.
- Remind members of their ability to contact the organization upon their termination.
- Contact members before they reach a milestone like retirement so organizations are aware of an information change.
The panellists listed several resources for plan administrators:
- Search firms such as Equifax and Garda;
- Other plan members who may have contact information;
- The Internet and social media sites such as Facebook, LinkedIn, and ancestry.com;
- Pension regulators; and
- Vital statistics that records births, marriages and deaths.