Dunnan on Dollars

  Personal Finance Tips from Nancy Dunnan

Pension Benefits:
What's Lost Is Found Again 

August 22, 2008 - If you worked for a company that folded and/or ended its pension plan, you should contact the Pension Benefit Guaranty Corp (PBGC). You may be due money! The PBGC's web address is: www.pbgc.gov. You can also get help by telephone at: 800-400-7242.

What is PBGC?

PBGC is a federal agency that protects certain pension benefits in the private sector. For example, if a qualified retirement plan ends without enough money to pay its employee's the benefits due, PBGC's insurance plan will cover them up to the limits set by law.

Who is involved...

When a private company ends its pension plan and the plan is transferred to PBGC, the company often cannot locate everyone who participated in its plan. And so, the PBGC searches for them through its extensive "Missing Participants" service.

This service, however, does not apply to everyone who has lost his or her pension. It applies only to those who participated in a "defined benefit" pension plan in a privately owned company and when that plan was terminated it was transferred to PBGC.

"Defined benefit" pension plans are traditional pension plans which promise to pay a specific monthly amount to participants when they retire.

Note: PBGC does not cover profit-sharing plans, 401(k) plans or federal pension plans.
A "found" employee may receive one but not all of the following:

• An annuity from a private insurance company, purchased by their former company 
• Funds deposited in a financial institution, such as a bank by their former company 
• Benefits from PBGC (if the former company transferred the missing person's funds to PBGC)
  

It's also possible, if you are a "found" employee that you will receive zero benefits -- if there were no provisions made for you under your previous pension plan.

The search...

You can search for benefits on the PBGC web site using your last name or the name of the company you worked for.

The web site also gives details about unusual pension situations, how to file appeals, and how handle with other pension related situations. For example if you are a beneficiary of someone who has died, you may be eligible for unclaimed benefits.

If you find the deceased participant's name on the PBGC website, PBGC will let you know if you are entitled to benefits. Beneficiaries normally receive payments lower than what the participant would have received.

According to a recent press release, the Search Program reunited about 22,000 people with approximately $137 million in missing pension funds. So it's worth your time to do a quick search!

- Nancy Dunnan

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If you want to suggest a column topic for Nancy, drop her a line.

Like what Nancy has to say? you might be interested in the new edition of her book:
How To Invest $50 To $5,000: The Small Investor's Step By Step Plan for Low-Risk, High-Value Investing