While there isn’t reliable data on just how many people are disconnected from their old pension plans, the federal government says the number could be rising with people switching jobs more often, qualifying for plans faster, retiring abroad more often and not updating their mailing address because of increased reliance on online accounts.
Administrators not being able to find recipients is certainly a problem, even if the amounts owing can often be small, said Todd Saulnier, chair of the national policy committee at the Association of Canadian Pension Management. “For sure it is an issue. It’s an issue with all the plan sponsors and administrators.”
The Ontario Teachers’ Pension Plan, for example, has about 30,500 members that it can’t locate. And while the Canadian government hasn’t put a dollar amount to the problem, a difficult task with 10 separate regulatory regimes, the U.K. estimated there was about $682 million in unclaimed pensions in that country when it rolled out a pension-finding database a few years ago.
The industry does use a variety of methods to try and track people down, including through Equifax, search firms and the Canada Revenue Agency, but in the last case in particular, people don’t tend to respond due to suspicions they’re being scammed, said Saulnier. “The success rate is pretty darn close to zero. How would you feel if you got a letter from the CRA saying you’re owed money?”
While pension plans are responsible for tracking down members, and funds are generally safe until the recipient needs them, there are reasons for people to reach out to administrators themselves. If a plan member wants to take a cash payout on the pension, they often have to do so before they’d qualify for the pension itself. “That delay of not contacting could close some option they otherwise would have had,” said Saulnier.
If the pension is defined contribution, the member will also need to decide whether they want to manage it or keep it with their employer. But if they’re no longer an employee at that company, they may be charged higher management fees.
Depending on the province, if administrators can’t find beneficiaries the funds could be transferred to unclaimed property divisions, which could then eventually end up in general government revenue. That’s the case in some circumstances in Quebec and Alberta, while in British Columbia it only happens if the pension plan is terminated.
Federally regulated pensions could also start transferring unclaimed funds, in this case to the Bank of Canada, if proposed changes go forward.
When an employee wants to track down an old pension, from jobs they worked at for either weeks or years, the most straightforward place to start is to call up the human resources or pension administrator at their old company. If the company has been taken over, gone bankrupt or is otherwise hard to find, they can try getting in touch with the provincial regulator.
Some provincial regulators, such as the Financial Services Commission of Ontario, also have databases for searching for the right contact information, and will be making more changes once a new regulatory body takes over in June. Ontario also now requires plan administrators to send out pension statements every two years, so if an Ontario-based pension plan member hasn’t received a statement, the province may not know where they are.
A surviving spouse should be able to get details on old pensions as well, because they often have the same rights to information. Other beneficiaries might have a tougher time jumping through privacy and legal hoops, but HR will likely help out, said Saulnier. “I’m sure HR would be willing to do a certain amount of digging from that perspective, particularly if it allows them to clean up their records.”