Democrats Coronavirus Relief Plan Could Save The Pensions Of 1 Million People
A politically elusive fix to the multiemployer pension crisis could finally become a reality, protecting retirees from drastic pension cuts.
Retirement experts have been warning for years that more than 1 million workers and retirees could lose their pensions if Congress doesn’t act. Now help from Washington might finally arrive, thanks to an unlikely legislative opening provided by the pandemic.
Congressional Democrats are moving a $1.9 trillion coronavirus relief plan through a process known as budget reconciliation, hoping to send it to President Joe Biden’s desk this month. A proposal to shore up troubled pension plans and the federal agency that insures them may end up hitching a ride on that package, saving retirees from having their pensions cut.
In the Best Practices of Pension Plans guidance, the DOL outlines “red flags” that may indicate that a retirement plan has a missing participant problem.
This is the first time the DOL has published comprehensive guidance to assist plan fiduciaries with respect to missing participants.
The Bottom Line
In response to this guidance, employers and plan fiduciaries should review their internal retirement plan policies and procedures for locating missing participants and beneficiaries. They should enhance or revise their policies, as necessary, to incorporate the steps identified in the guidance as best practices.
FULL ALERT
The United States Department of Labor (DOL) has issued guidance to assist plan fiduciaries in fulfilling their ongoing obligation of locating missing or nonresponsive participants and distributing benefits to such participants or beneficiaries. This is the first time that the DOL has published comprehensive guidance to assist plan fiduciaries with respect to
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On January 12, 2021, the Department of Labor (DOL) issued a 3-part set of missing participant guidance for employer-sponsored retirement plans, addressing a variety of issues:
Best practices for reducing missing participant populations;
Explanation of the DOL’s goals and process in missing participant audits under the Terminated Vested Participant Project; and
Authority for fiduciaries of terminating defined contribution plans to use the PBGC Missing Participant Program.
Uniting participants with their retirement benefits has been a priority for the DOL for a number of years, as well as for plan sponsors and fiduciaries who want to see their employees benefit from their hard earned retirement dollars. In that regard, while additional guidance is always welcome, as discussed below, several of the DOL’s best practices could be viewed as impractical at best, or at worst, unworkable by plan fiduciaries.
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It is important to note that, since this guidance was issued in the late days of the Trump administration, the Biden administration will likely review this guidance. It is not uncommon for guidance to be delayed, revised, and/or rescinded as part of the review process.
On January 12, 2021, the U.S. Department of Labor (“DOL”) issued new guidance on how employee benefit plans can connect with missing plan participants and retirees. This new guidance was released in three parts: a list of best practices for locating and tracking missing participants; a compliance assistance document describing the DOL s missing-participant investigations; and a field assistance bulletin temporarily easing enforcement activities relating to ERISA violations relating to missing participants.
House Education and Labor Chairman Bobby Scott (D-VA) recently introduced legislation that seeks to rescue multiemployer pension plans (MEPs) facing insolvency. Entitled the Emergency.