NEW YORK - At a time of great uncertainty about pensions, it’s not always easy for workers to keep tabs on their own retirement plans. But keeping an eye on paperwork and asking questions can help.
Employers sponsoring traditional pension plans are required to provide covered employees with a summary of the plan, explaining how it works. In addition, each year, employers are required to make available an individual benefit statement for each worker.
That notification — sent out automatically by many companies, but issued by some only in response to a written request — specifies the amount a worker can expect to receive in their monthly pension checks at retirement.
Employers also are supposed to provide a summarized annual report on the plan. Companies with pension plans that have been less than 80 percent funded for the past two years are required to provide covered individuals with a written notice of the status.
Pension advocates caution that just because a plan is underfunded doesn’t mean workers need to worry. The value of pension plans fluctuates over time. The problems arise when an underfunded plan is maintained by a troubled company, or one in a troubled industry.
For an employee or retiree to get a more in-depth look at the well-being of their pension plan, they may need to dig beyond the paperwork the company provides them.
One place to look is in the annual financial statement, known as a 10-K, that must be filed by companies whose stocks trade publicly. Pension information is contained in a footnote to those reports, which are posted online. Workers looking for the footnote should search for the term ‘‘ABO,’’ an acronym for ‘‘accumulated benefit obligation.’’
The note will show a company’s pension liabilities — the amount it owes workers and retirees — and the current market value of its pension plans.
‘‘You want your market value of assets to be close to or above that number. Then you know it’s 100 percent funded,’’ said Ron Gebhardtsbauer, senior pension fellow with the American Academy of Actuaries.
The problem with the figures in the 10-K is that are a total of all of a company’s pension plans. But many companies run multiple plans, and without a breakout, people can’t see how their plan is faring, he said.
The answer, albeit an imperfect one, is to look at paperwork that companies must file with the federal government each year. It is called a Form 5500, and while it provides comprehensive data, the problem is that it is often two years old.
The forms are loaded with numbers. But once you’ve located the one covering your own particular plan, Gebhardtsbauer said, people should focus on the part known as Schedule B, and look at line 1b(1), labeled Current Value of Assets. That is the amount held by the pension plan. Then look at line 2b(4), in the total benefits column. That shows total benefits the pension plan owes.
Workers may be able to obtain the Form 5500 from their employers. But there are alternatives. The paperwork filed by each company can be obtained from the government. To obtain the Form 5500 filed by a plan sponsor, write to the U.S. Department of Labor, EBSA Public Disclosure Room, 200 Constitution Ave. NW, Suite N-1513, Washington D.C. 20210. A copying fee may be charged.
Much of the information filed with the government is also available from private companies. One Internet site offering Form 5500 data for free to those who register is www.freeerisa.com. The forms are searchable by company name, but the site, administered by a private company and geared to benefits professionals, charges to search using many other criteria. Bear in mind that the forms are complex.
If you think your pension plan was terminated and that you are entitled to benefits, you may want to contact the Pension Benefit Guaranty Corp., the federal agency that insures traditional pension plans.
The agency’s web site, www.pbgc.gov, includes search features allowing people to check all plans for which the agency is trustee, as well as a list of beneficiaries it is looking for.