On January 12, 2021, the Employee Benefits Security Administration (“EBSA”) of the Department of Labor (“DOL”) announced new guidance on a range of issues related to missing participants:

  • In Missing Participants – Best Practices for Pension Plans, EBSA has provided examples of best practices that it has identified as being effective at minimizing and mitigating the problem of missing or nonresponsive participants.
  • This new guidance also includes Compliance Assistance Release No. 2021-01, which provides a roadmap of investigative processes and case-closing practices of EBSA investigators who conduct Terminated Vested Participants Project (“TVPP”) audits of defined benefit pension plans. One purpose of these audits is to assess whether defined benefit plans have taken appropriate steps to locate missing participants and beneficiaries.
  • EBSA also issued Field Assistance Bulletin No. 2021-01, which announced the DOL’s temporary enforcement policy on a terminated defined contribution plans’ use of the Pension Benefit Guaranty Corporation’s expanded missing participants program.

This article focuses on the guidance for ongoing plans (and not Field Assistance Bulletin 2021-01 for terminated plans).

Although this sub-regulatory guidance is nonbinding, and only intended to provide clarity to the public, it includes a number of recommendations from EBSA regarding best practices that defined benefit and defined contribution plan fiduciaries can implement to reduce the risk of missing participant issues.  Many of these recommendations are reminders of existing practices in the retirement industry that are commonly utilized, such as regularly auditing census information, correcting data errors, and flagging undeliverable correspondence and uncashed checks for follow-up.  EBSA’s guidance is not without a handful of new recommendations, however.

Based on this guidance, we have set forth below five potentially new steps that plans could take, on a regular basis, to reduce the risk of missing participant issues.  This list is not exhaustive, and represents only part of the missing participant search methods recommended by EBSA.  Plan fiduciaries may consider a number of factors in deciding what steps to take, including the size of a participant’s accrued benefit or account balance, the cost of the search efforts, and which practices are likely to yield the best results in a cost efficient manner.

  1. Implement an Online Platform to Maintain Up-To-Date Plan Census Information.

Plan fiduciaries may consider implementing an online platform for the plan to help collect and maintain accurate data for the plan’s census.  According to EBSA, plan participants could use such an online platform to update their contact information, as well as the contact information for their spouses and beneficiaries.  Naturally, EBSA expects that any information updated through such an online platform would be subsequently incorporated into the plan’s census information.  As an additional step, EBSA has also recommended providing prompts for participants and beneficiaries to confirm their contact information upon login to an online platform.

  1. Reduce to Writing the Plan’s Policies and Procedures to Address Missing Participant Issues.

Plan fiduciaries may consider adopting a written policy to address missing participant searches.  Further, to the extent the plan relies on a third party recordkeeper to assist with such searches, the plan fiduciary may require the recordkeeper to maintain a written policy to address missing participant issues, and monitor whether the recordkeeper complies with such policy.

As a matter of best practice, EBSA expects that plan fiduciaries will take appropriate steps to document their missing participant policies and procedures.  Indeed, as explained in CAR No. 2021-01, when EBSA opens an investigation into missing participant issues as part of its TVPP audit program, they will request the plan’s internal procedures and practices for reaching out to unresponsive participants or for searching for them.  During such investigations, EBSA’s investigators will also examine the plan’s contracts and experiences with its third-party recordkeepers who assist with missing participant search functions.  Although CAR No. 2021-01 only relates to defined benefit pension plans, it appears that this would apply equally to defined contribution plans, as this recommendation is reiterated as a best practice in EBSA’s Best Practices for Pension Plans guidance.

  1. Register Missing Participants on Public and Private Pension Registries.

As part of their search for missing participants, EBSA recommends in Best Practices for Pension Plans that plan fiduciaries consider registering missing participants on public and private pension registries that have privacy and security protections, such as the National Registry of Unclaimed Retirement Benefits.  EBSA also recommends publicizing this registry through communications to existing employees, union members, and retirees.

Fiduciaries would likely want to consider the adequacy of the registry’s privacy and cyber security provisions and evaluate the scope and reach of registries and how many registries to use.

  1. Communicate the Name of Any Predecessor Employer or Plan.

EBSA recommends in Best Practices for Pension Plans that plan fiduciaries clearly mark envelopes and correspondence with the name of any predecessor employer or plan for any participants who separated before such name change.

As explained by EBSA in CAR No. 2021-01, mergers, acquisitions, and company name changes create a missing participant risk — workers may have worked for a company that had a different name, and will therefore ignore mail from a company for which they believe they never worked.  Similarly, individuals may have participated in predecessor plans, and therefore may ignore plan correspondence that contains a different plan name.

  1. Engage in Missing Participant Searches Using a Number of Different Search Tools to Locate Missing Individuals.

Plan fiduciaries already rely on a number of different search tools to locate missing participants, such as commercial locator services.  In Best Practices for Pension Plans, EBSA has identified additional search tools that plans may rely on to locate missing individuals, including, but not limited to, the following:

  • free online search tools (e.g., google or yahoo searches);
  • public record databases;
  • obituaries;
  • social media;
  • credit reporting agencies;
  • outreach to colleagues and designated plan beneficiaries, including through publication of a list of missing participants on the company’s intranet; or
  • a plan fiduciary’s own proprietary internet search tool.
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Photo of Kendra L. Roberson Kendra L. Roberson

Kendra Roberson has experience advising clients on a broad spectrum of employee benefits matters including tax-qualified retirement plans, employee stock ownership plans, executive compensation arrangements, stock option and other equity-based compensation plans, cafeteria plans, VEBAs, self-insured medical plans, and other health and welfare…

Kendra Roberson has experience advising clients on a broad spectrum of employee benefits matters including tax-qualified retirement plans, employee stock ownership plans, executive compensation arrangements, stock option and other equity-based compensation plans, cafeteria plans, VEBAs, self-insured medical plans, and other health and welfare plans.  Her experience includes plan design and drafting, regulatory compliance, ERISA litigation, and handling employee benefits matters and plans in corporate transactions.  In addition, Ms. Roberson has extensive experience advising employers and state governments on compliance with the Patient Protection and Affordable Care Act (“PPACA”).

Photo of James Damon James Damon

James Damon is an associate in Covington’s Washington, DC office, where he practices with the firm’s Employee Benefits and Executive Compensation Practice Group.