Historical Wages for DB pension

[justasking]

Background: We have an employee that wants us to prove that all wages being used in their pension is accurate for the last 30 years. The company I work for is in an industry where there are lots of mergers/acquisitions, etc. We hold the records in our payroll system for about the last ten years. The prior wages (mostly from other companies) came over on file feeds from prior retirement plan vendors. We do not have any other prior pension plan benefit offsets, our pension actually calculates the benefit for the entire 30 years (all wages, not a final 36 month pay pension). Most of the hourly employee eligible wages are for their normal scheduled work hours and excludes certain overtimes. The W2s wont really be much use to us in this situation.

Question: Do we only need to provide proof for maybe the last three or maybe it is seven years of the wages being used in the calculation? We are able to print paychecks for the last 10 years. I just wanted to get your opinions before we double check with legal.

[david rigby]

Have you considered providing "proof" of the few years available, and then saying, "that's all folks"?

[Andy the Actuary]

This is the approach we customarily take. We provide a list of the wages considered and indicate to the employee that if they have evidence to support these are incorrect, provide it and the issue will be reconsidered. Once you've bought into proving, you've committed yourself to operating on the employee's terms and may be pressured to provide information you don't have. It's unclear how you prove anything without going back to time records and analyzing the pensionable compensation carried on record.

The bigger question is are you dealing with a cynical person -- you know the kind who will typicallly raise his/her hand 5 times in a general information meeting or are you dealing with an irate employee who wants to bar-b-que the company? You need to determine which one. Clearly, if the latter, you can expect the suggested approach only to fuel the fire.

Recommendation: Do not communicate with employee until you have more information and possibly have consulted legal.

[david rigby]

No quibble with Andy's advice.

However, both comments above should include a caveat that this question might rise to the level of "appeal" (as that term is defined in the plan document). If so, you have certain procedures to follow, and timeframes to observe.