Unclaimed pension benefits and uncashed benefit checks are growing significantly, the Department of Labor’s Advisory Council on Employee Welfare and Pension Benefit Plans was told Wednesday.
Aon Hewitt estimated 30 percent of vested workers who were fired or left their jobs voluntarily before retirement can become “lost” to pension plans.
The increasing number of adults having multiple jobs in their careers and leaving their retirement accounts with their ex-employers when they change jobs and employers’ automatic distributions of former worker account balances under $1,000 are contributing to an increase in the amount of unclaimed benefits and uncashed benefit checks, James Haubrock, a representative of the American Institute of Certified Public Accountants, told the panel.
He noted in the past, the value of unclaimed benefits and uncashed payment checks for plans has not been material, but this is changing. “These amounts have become increasingly material for some plans and there is an increasing likelihood that the amounts will become material to more plans."
Haubrock pointed out uncashed checks may go undetected indefinitely by plans.
He warned participants who have not been given a means to contact the plans they left are in danger of becoming fraud victims. “Because those participants are not receiving statements, they are unable to determine whether unauthorized distributions are made from their accounts,” he said.
The accountant said beneficiaries who have not cashed one or more checks could become victims as well.