Pension industry hamstrung in efforts to find missing plan members

Despite pension administrators’ best efforts, missing members are a significant challenge for many plans. With no standardized method for searching for them, plans tend to end up using whatever resources they can muster.

To Jon Marin, a pension lawyer at Osler Hoskin & Harcourt LLP, the problem of missing members is one of the more “challenging and potentially costly” issues faced by plan sponsors.

Plans may be unable to locate members for several reasons, says Marin. A common scenario involves members who, upon termination of employment, have the choice between transferring accrued entitlements out of the plan and taking a deferred pension.

“In this latter circumstance, more and more with increased job mobility, there can be a significant period of time between when the employee terminates employment and when they become eligible to receive a pension,” says Marin. As a result, their contact information may be out of date.

Read: Pension administrators burdened with tracking down missing retirees

Tracy Abel, senior vice-president of member services at the Ontario Teachers’ Pension Plan, says the organization has 34,000 missing members. Abel attributes the high numbers primarily to those to whom the plan owes small amounts. “Of the 34,000, I would say about 80 per cent have less than a year of credit in the plan.”

Ken Steen, an executive assistant at the Civil Service Superannuation Board of Manitoba, doesn’t have as big of a problem. He uses a variety of methods to track down missing or deferred members.

The process starts with combing through member paperwork for addresses or phone numbers, before trying directory services, social media and other online resources. If he still can’t find the person, the next step is to try a credit-check service.

By exhausting those options, Steen found 300 members this year.

Sending out the search unit

A year ago, Steen was able to look for deferred members by sending one letter.

“One of the steps that we [used to take] . . . was to contact the national search unit of Human Resources Development Canada,” says Debbie Gallagher, chair of the Association of Canadian Pension Management’s Ontario regional council. “What we would do is send them a list of the people we couldn’t find, and they would contact that person and have them contact us.”

The search unit no longer exists, and in its place, the Canada Revenue Agency offers a letter-forwarding service that Marin describes as much more limited.

Read: Making the most of annual pension statements to boost member engagement

He says the service requires administrators to have exhausted all efforts, including trying a private sector company, and describes it as “a last-resort option . . . available where the request is of an urgent or compelling nature.”

The complications make Steen reluctant to take advantage of the service. “We used to be able to submit a list . . . submit a name and a [social insurance] number, and they’ll know where and whether or not the person’s still alive. The letter forwarding, we would have to create a letter, give it to the government, they would have to look at it and let us know if it’s OK to send.”

According to CRA spokesperson Lisa Damien, the change reflected a desire to avoid competition with private sector organizations and “unwelcome intrusions” of privacy. The service had only eight requests from pension plans in the last year, however.


Legislative gap

Governments do have legislative options to address the issue.

“In some jurisdictions — for example, under the federal Pension Benefits Standards Act — they’ve enacted provisions that say the minister may, with the approval of the governor in council, designate an entity for the purposes of receiving and holding the pension benefit credit of a person that can’t be located,” says Marin.

When it comes to the provinces, however, unclaimed property legislation regarding pension benefits only exists in Alberta, Quebec and British Columbia.

Read: Pension association asks CRA for help locating pensioners

So with the challenge remaining for plans in the other provinces, the ACPM has asked the government to reinstate the national search unit.

“How else do you do it with minimal cost?” asks Gallagher.

Michael Chen is a former editorial intern at Benefits Canada.

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