Understanding Nuances of Locating Missing Pension and Benefit Plan Participants Without a Social Security Number
by Thomas C. Lawson, CFE, CII
Under Title 29 CFR 4050.4 the diligent effort compliance requirement involves locating missing pension and benefit plan participants based on use of the participant’s social security number (SSN).
Having the SSN is very important because the entirety of the file chain is rooted in the SSN.
Also having the SSN makes the commercial locator service better able to identify your participant to an acceptable consumer reporting agency standard.
In recent years, identity theft has skyrocketed. This awareness has not been lost on the compliance or audit departments of the root sources of the identification information.
That includes the SSA’s Identification and Death Master File (DMF) sections. Even more importantly, credit bureaus and other source agencies that make a significant contribution to the successful locating of your missing participants have been effected.
This stands to reason because how can one administer the pension or benefit plan if one does not possess the participant’s SSN?
Just three reasons why an SSN cannot be located
1. What if a transposition error occurred somewhere in the chain of custody of the management or administration of a given consumer’s file? Possibly by the HR Department, Actuary or TPA and no one caught the error until services like ours made the discovery during a routine locate.
2. Your vested participant could have departed employment with the plan sponsor and for some reason the file went inactive. Then the participation was re-activated beyond 7 years and the SSN was lost because the employment file was destroyed as a matter of course.
3. The TPA, HR Benefit Department, or someone else in the plan administration chain tasked to locate the missing participants simply can’t retrieve the stored file(s).
Innocuous and innocent as these scenarios seem; they wreak havoc for any commercial locator service.
The kicker is that under all attributable rules, there is no provision anywhere for a mistaken or a completely missing SSN in the administration stream so how does one even get to first base in finding a lost participant?
Over the years we have invested at least as many legal dollars as we have algorithm dollars trying to figure out how to re-unite people with their pension plans. Even with ERISA and Labor Codes, there are many anomalies in uncharted water when it comes to locating someone without an SSN
Low-priced services are a waste of your time
While there are companies offering low-priced, locate services in concert with archaic and often labor-intensive manners, they often only do half of the job you require
Often their services rely on you to complete the puzzle using expensive administrative dollars to do so and most of these cheaper services don’t offer alternatives to an SSN search.
Being able to handle nuances and these anomalies plays a big part in successfully re-uniting people with their money with a minimum of expenditure and more importantly, time.
That has been our mission since we started EmployeeLocator.com in 1988 and is also the reason we created the Open Locate Platform which bases a search in criteria other than a participant’s SSN.
Employee Locator criteria for searches without an SSN
There is a bit of a rub in using non-SSN data to locate these folks, but the rub does not lie in the use, it lies in the access. Let me explain.
Today anyone who uses providers of credit reports, employment background checks, or commercial locator services, in fact – all end-users have to be properly vetted in order to be classified as a legitimate end-user of the service.
To further complicate things, commercial locator services do not technically fall under the Fair Credit Reporting Act (FCRA). So it ends up a potentially damaging consumer free-for-all if the commercial locator service does not maintain itself to an FCRA standard.
This is critical so that the consumer may have direct and unfettered access to whoever touches their personal information in the event that the consumer asserts any form of foul play.
Good news is that as long as any given end-user can justify the use of the consumer’s private identification information, and the provider can prove that it thoroughly determined that the service it provides was to a legitimate end-user of the information, the information remains secure.
The consumer is protected and most importantly, that consumer is sent down the road to interview other end-users of their personal information which may have resulted in a compromise.
With careful initial vetting of a given end-user we are able to provide current missing participant locate services to our market channel based not only on a participant’s SSN, but also now based on their name, date of birth, and/or name and former address.
We actually have special contracts with our data providers to expand the service base and we are subject to audit at their whim because of it.
Does doing it right increase the cost?
Once caveat that bears discussing is the cost. Using the SSN to connect the participant with his pension or benefit is the least expensive form of locating missing employees. Without the SSN, a potential drama known as back-end-compliance comes into play.
As a commercial locator service, in this context, using anything other than an SSN to locate a missing participant puts the locator service and the end-user in the highly compromising position of mimicking an identity thief.
It thus exposes the locator service (and its end-users) to additional scrutiny especially if the identity is actively under assault.
Under assault is defined as if at the time of the inquiry, theft of that person’s identity is already underway, or there is an active police case number assigned, or they are the subject of a law-enforcement sting operation.
Under these circumstances, the locator service and the end-user could come under the scrutiny of law enforcement or other equally as ominous governmental threats. Even when a locator service or the end-user’s involvement is clearly documented to be innocent, permitted, justified, proper and in the normal course and scope of their respective business models.
In the case of numbers 1 & 2 above circumstances happening you are likely going to have to bite the bullet as far as the increased cost is concerned. In the case of number 3, someone is going to have to determine if the increased costs are justified or if the archived file can be found.
In the end
albeit at a higher cost. As long as the end-user vetting is competent and everyone is on the same page, these alternate methods can be a lifesaver for the participant being rightfully reunited with their pension or benefit.
Thomas C. Lawson, CFE, CII is a Life-Member of the ACFE and the longest-serving member of the Editorial Review Committee for FRAUD Magazine. Tom is the Founder of APSCREEN, the nation’s oldest Factual Employment Screening firm, a term Tom coined to differentiate APSCREEN’s level of care in the screening process. Tom is also thought to be the longest-serving Negligent Hiring Expert Witness from the Improper Employment Screening and FCRA Compliance perspectives with his first case served in 1984. Tom’s CV is available for review here