Track down your long-lost pension money

"The kind of people we see are the ones who say, 'I worked for a company many years ago; I wonder if I have a pension,'" said Judi Apfel, staff attorney at the Pension Rights Center in San Francisco. "They don't think about what the rules and regulations are."

Under those rules and regulations, a former employee is more likely to be owed a pension from a recent job than from a job that ended more than 20 years ago. That's mainly because pension laws have changed over the years, requiring that employees be vested -- granted the permanent right to their pensions -- in less time.

Before the mid-1970s, some companies did not pay pensions to a worker who left the employer before retirement age. After the Employee Retirement Income Security Act of 1976, workers typically were vested within 10 years of starting work at a company. In the late '90s, the rules were tightened again to give the vast majority of workers full rights to company pensions within five years.

Stay in touch and keep those pension documents

Several pension-advocacy groups have attempted to get a national registry to provide one-stop searching for lost pensions, but those efforts have not yet borne fruit.

Meanwhile, the roughly 40 million Americans who participate in defined-benefit plans should keep track of their pensions to make sure they're not someday ranked among the missing.

If you leave a company that promised a pension, make sure you keep in touch -- and be sure to keep pension documents, which indicate what you're owed, said Karen Ferguson, director of the Pension Rights Center in Washington, D.C.

Every company that offers a pension plan is required to provide participants with a "summary plan description." This document spells out your rights, such as when your pension benefits vest, and describes the formula for calculating pension benefits.

Workers should maintain a pension file that includes statements from pension administrators showing when they became vested and the benefits due at retirement, Ferguson says.

It's also wise to keep a copy of the employee's "exit letter" and a copy of the plan's summary plan description. The rules posted in the summary plan description that was in effect when the employee left that job are the ones that govern the pension benefits.

Kathy Kristof is an author and an award-winning personal-finance columnist with the Los Angeles Times.

Updated Jan. 4, 2008

< previous |  1 | 2 |