Although so-called defined-benefit pensions were long considered the gold standard of retirement plans – promising guaranteed regular payments for life – corporate churn, financial pressures, and outright fiscal malfeasance have made many of them less secure than the employee-guided, non-guaranteed 401k stock investment plans that many companies now offer. Many affected workers and retirees – potentially 33 million in more than 25,000 federally protected defined-benefit pension plans – are among more than 70 million Baby Boomers (those born from 1946 to 1964) retiring at an accelerating rate, with only some 40% already retired.

That means the first federal backstop for such pensions created by Congress in 1974 – the Pension Benefit Guaranty Corporation – is being kept busy dealing with troubled plans, with about 1,600 terminations annually in recent years. All told, more than 145,000 plans shuttered from 1975 to 2019, with the PBGC becoming trustee for almost 5,000 of them. 

And the private pension problem still festers: The Great Resignation of older workers in the pandemic era threw Social Security earnings and retirement savings off track, making the issue of failing pensions even more pressing to those with a claim to them.

What is the government doing about it, and what can affected retirees do to protect themselves? Some tips:

• Documents are king in this process – i.e., paperwork saying you were vested and owed a pension. You may first need to track down your former employer.
• The PBGC provides a list of “trusteed” plans that it has taken over. If your plan is being managed by the agency, then that’s your first stop, although you may have no way of knowing that. You can call the agency at 1-800-400-7242. 
• The PBGC’s pension search directory is another resource. You can also try the PBGC’s “My Pension Benefits” portal.
• The PBGC has an “Advocate” office that offers “pension tracing services.” Call (202) 229-4448 or advocate@pbgc.gov.
• If your own work records are long gone and the above steps prove fruitless, your last resort for proving your claim to a pension might be a Certified Itemized Statement of Earnings from Social Security, listing when you worked and for whom. That will cost $122 and likely take 120 days to process, Social Security says. It gives a number to call, 1-800-772-1213, but only after that four-month wait period.

When a company files for bankruptcy, a plan may be also terminated by a court or continued without PBGC intervention – if there are enough assets in the plan. It’s helpful to know what kind of termination an employer chooses when electing to shut down a defined-benefit plan.

• Standard Terminations. The majority of plans are shuttered under this category, which means “a plan that has enough money to pay all benefits owed to participants and beneficiaries . . . For each participant or beneficiary, the plan administrator either purchases an annuity from an insurance company or, if the plan permits, pays the benefit owed in another form (such as a lump sum),” according to the PBGC.
• Distress Terminations. This is when the employer or “controlled” group can’t fund future benefits and meets certain PBGC rules. Then the “PBGC takes over the plan as trustee and uses its own assets and any remaining assets in the plan to make sure that current and future retirees of the plan receive their pension benefits, within the legal limits.”

The Labor Department maintains a list of the most underfunded multi-employer plans, but it provides little direct help for workers looking for unclaimed pensions.

Finding plans that have shut down may be easier than finding some that still have money in them and owe benefits. There are more than 16 million retirement accounts sitting out there (including 401ks) – typically with balances of $5,000 or less, according to the Government Accountability Office. It’s not a simple matter to do a search engine query to find them. Congress has authorized the PBGC and other agencies to set up a user-friendly “lost and found” database or “registry” of pensions, but it may not be up and running for a few years.

What about bolstering underfunded plans? The $1.9 trillion American Rescue Plan Act of 2021 was kind to the multi-employer plans generally offered to union members, to the tune of billions of dollars in assistance. Under the ARPA, a Special Funding Assistance Program was embedded in what became known as the “Butch Lewis Act.”  It supports about 250 most “severely” underfunded plans, the PBGC stated in its fiscal 2021 Annual Report.

Before the pandemic and the ARPA, some 1.3 million workers were in troubled multi-employer plans. But now, observes Karen Friedman, executive director of the nonprofit Pension Rights Center: “If your plan is accepted and qualified for the special assistance, most people won’t have to worry (this is for multi-employer plans only).”

For now, many retirees are in the same boat as Jesus Nunez, a former Checker Motors worker in Burbank, Illinois, who is now working to recover his pension with the help of Anna-Marie Tabor of the Pension Action Center at the University of Massachusetts-Boston.

“There’s often a complete lack of transparency,” Tabor said of what’s become painfully obvious to those adversely affected. “Some people have no idea what happened to their pension plans.”

This article was adapted from a RealClearInvestigations article published Sept. 14.