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Defining Your Pension Search: Rules Of Eligibility

Every private pension plan's rules of eligibility are contained in a document called a summary plan description (SPD) that is supposed to be given to every worker at the time he or she joins the plan. As the rules change, the worker should periodically receive an updated document. The rules in effect at the time you leave the company are the rules that determine whether you have a pension or not. Changes in the rules after you leave the company usually do not apply to you.

Summary plan descriptions were required only after Congress passed the federal Employee Retirement Income Security Act (ERISA) in 1974. In some cases, however, comparable company documents are available for earlier years, especially in the case of pension plans that were developed in negotiations between management and a union.

It matters whether you left the job before 1976 (see the box on page 8 on "Legal Protections"). If you left after 1975, you have more rights under federal law. However, even workers who left before ERISA became effective for their pension plans are sometimes able to collect their pensions if they can locate the pension fund and meet the requirements of the plan.

Spouses' Rights.

In most traditional (called "defined benefit") pension plans, there is a "joint and survivor" option, meaning that the worker's spouse is entitled to a benefit. If this option is selected and the spouse survives the worker, pension payments will continue, usually at a reduced amount, for the rest of the spouse's life. In addition, many plans provide pre-retirement survivor coverage that would provide a benefit to the spouse if the worker dies before retiring. Therefore, as a surviving spouse it may be worth looking for a pension your husband or wife earned. Under the Retirement Equity Act of 1984, a worker in a traditional plan cannot elect an option other than the "joint and survivor" option without the written agreement of the spouse. This protection does not apply to profit-sharing or 401(k) plans or to individual retirement accounts.

The object of your search is the pension plan that you were part of – or its successor. Broadly speaking, here is what may have happened to your benefits:

The plan may still be intact, in one form or another. That is, the original company may have reorganized, or been bought out, but the current owners have inherited the legal obligation to pay the benefits due under your old pension plan.
The plan may have bought an annuity contract from an insurance company that took over the obligation to pay annuities to everyone entitled to benefits under the plan.
The plan may have been transferred to a bank or a mutual fund for continuing administration of the pension fund.
The plan may have been taken over by the Pension Benefit Guaranty Corporation (PBGC), which will pay the benefits up to certain limits (see box on page 14).
The plan may have been terminated by the employer, with benefits paid to plan participants who could be found. If the plan was a defined benefit plan, benefits for "missing" participants like you may have been turned over to PBGC for its Pension Search Program.
A final possibility is that the plan is simply gone, along with the money it owed. This possibility, although it is usually illegal, cannot be ruled out. But there is no reason to assume that it happened.

Your job will be to trace the history of the pension plan from the time you left the job to the present. This may be as simple as finding out where your old company has moved, or it may be as difficult as piecing together a complicated story of corporate mergers and bankruptcies.

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