Unclaimed Defined Benefit Pensions Can Help COVID-19 Economic Recovery

ABSTRACT

The COVID-19 economic crisis makes it vitally important that workers who earned defined benefit pensions receive them at retirement. Unfortunately, billions of dollars that could help cushion the financial shock are sitting unclaimed, because the people who they belong to cannot locate the company responsible for paying them. As defined benefit pension plans have been terminated, merged and moved over the years, large numbers of deferred vested participants have not been notified about their benefits. The widespread and growing practice of insurance company pension buy-outs can be especially problematic for participants without notice. Broader use of electronic disclosures for pensions also threatens to make the situation worse. In the wake of COVID-19, policy makers should take steps to ensure that pension benefits are part of the economic recovery.

KEYWORDS:

• Pensions
• retirement
• annuities
• electronic disclosures
• ERISA

Key points

• Retirees will need access to earned defined benefit pensions during and after the COVID-19 emergency.

• Pension plan terminations are a common occurrence that present significant obstacles to claiming benefits.

• After a plan termination, many participants may not know where to go to claim their retirement benefits.

• Participants need better notification and information about changes that impact their pensions.

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Funding

The author thanks the RRF Foundation for Aging; and the Administration for Community Living, U.S. Department of Health and Human Services (DHHS) for their support. The points of view and opinions expressed are the author’s own.