One of the least glamorous jobs in retirement plan administration is dealing with missing participants.
People change jobs. They move. They get married and change their names. Some pass away without beneficiaries updating records. Over time, plan sponsors and recordkeepers are left trying to track down former employees who are entitled to retirement benefits but cannot be located.
For years, this has been a persistent headache for plan fiduciaries. It is not enough to simply throw your hands up and say, “We can’t find them.” The Department of Labor expects fiduciaries to make reasonable efforts to locate missing participants. That means searches, mailings, database reviews, and documentation. All of that takes time and money.
A newly launched States’ Unclaimed Retirement Clearing House (SURCH) may offer some relief. The program creates a centralized system through which plan sponsors and recordkeepers can voluntarily transfer certain unclaimed retirement distributions to participating state unclaimed property programs. Instead of dealing with dozens of different state processes, the clearinghouse serves as a single portal. Currently, dozens of states and the District of Columbia are participating.
The concept makes sense. State unclaimed property offices have decades of experience reuniting people with forgotten assets. They maintain searchable databases, conduct outreach efforts, and are in the business of finding owners of abandoned property. Retirement benefits are simply another type of forgotten asset.
Of course, this is not a free pass for fiduciaries to stop searching for participants. Plan sponsors still need prudent procedures and documentation. But for plans struggling with stale checks and missing participants, this may finally provide a practical solution to a problem that has frustrated the retirement plan industry for years.
The missing participant issue is not going away. However, for the first time in a long time, plan fiduciaries may have a new tool that makes the problem a little easier to manage.