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Claim for pension benefit from a predecessor, predecessor company


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An individual claims he's due a pension benefit from company A.  Company A was acquired by company B and then we acquired company B.  The plan was terminated before we purchased company B and we don't have any pension plan records.  What obligations do we have to the individual?  Thanks in advance!

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Did you acquire the assets of B or the stock of B? If just the assets, then I don't think you have any obligation.

If it's the latter, you assumed all assets AND liabilities of B, including the pension plan and obligations related thereto. If those liabilities were indeed satisfied before the acquisition then maybe no issue for you - but that is the underlying question here. If the pension plan was covered by the PBGC, plan termination records are required to be maintained for seven years, so those should have been turned over. They may not be of any help here but it's worth having if possible. These records might also show that an annuity was purchased, the benefit was paid in a lump sum, or turned over to PBGC.

A likely scenario is this person making a claim because they applied for Social Security and SSA gave them a letter saying they may have a benefit from this plan. Many people who were paid out their benefits years ago get these letters, forget they got paid (or think they have more coming) and come looking for their benefit. Plan sponsors are required to report deferred pension benefits to SSA (which is why this letter gets triggered) but it is an option to subsequently report a deletion to SSA when someone gets paid that benefit and laziness by plan sponsors and/or TPAS years ago results in these sorts of headaches now.

We would have our clients respond in such an instance as follows: The plan was terminated as of XXXXXXX and all benefits were paid out and/or annuities purchased and/or turned over to PBGC in the case of missing or unresponsive participants. If you did not receive a significant volume of notices and forms during that time period then you had no accrued benefit in the plan at such time and your benefit was either previously paid to you in a lump sum or forfeited if you were not vested. Please check your prior financial records (bank, brokerage, IRA, etc.). If you still believe you are entitled to a benefit, please provide information to substantiate, such as a benefit statement.

If a plan had small benefit cash-out provisions, general lump sum provision, or offered lump sum windows periodically, we would make note of those as well. You likely do not have that sort of information either. Usually this is sufficient to jog their memory or otherwise make them go away. Sometimes we have to dig through historical records to find a proof of distribution, but that is the rare case. 

Hope this was helpful, good luck. 

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services


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Assuming it's a DB plan, another possibility is referring him to check the PBGC missing participants program if company A (or company B) terminated that pension plan at some point. In some cases if they couldn't him or her when the plan terminated, they may have sent his benefit to PBGC.  


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