When Tasse asked for the money he was due, GTE’s employee-benefits group turned him down flat. However, says GTE today, a different department had already spotted the mistake and was working on a repayment plan. J. Randall MacDonald, a GTE senior vice president, says that letters to all the affected employees went out last month. They’re owed around $18 million, including interest on the unpaid funds. Tasse himself collected $4,926.
It’s impossible to know how many U.S. workers are currently getting less than they’re due. Your company’s calculations–for lump-sum payouts or monthly pensions–look graven in stone. But mistakes are getting ever more common because today’s plans are so complex, says Chester Salkind, head of the American Society of Pension Aetuaries. That’s true not only of retirement payouts but of other benefits, too.
For Denise Wassenaar of Reston, Va., the issue was her widow’s mite. Nine years ago a brain tumor killed her husband, Richard, the top law-enforcement officer for the IRS. She received the usual federal survivor’s benefit-but Richard had paid extra for benefits and she thought that her check was unfairly small. Through research, she learned that the law did indeed provide higher payments to the survivors of certain federal law-enforcement officers and firefighters. When the government rejected her claim, she took it to attorney Edith Fierst of Fierst & Moss in Washington, D.C. Fierst won the case last year. Wassenaar, now 49, picked up $40,000 in back benefits and an extra $600 a month.
Unlike GTE, the government hasn’t notified other widows and widowers it shortchanged. “We have no remote idea who they are,” says a spokesperson for the federal Office of Personnel Management. It did pay three widows who carne forward on their own, but it’s turning down claims that don’t exactly match the Wassanaar case. So, Fierst is suing again.
In general, actuaries say, people’s benefits are correct. A luckless few lose out to fraud. But most underpayments (and overpayments, too) flow from the confusion that attends complex and ever-changing rules. Outside auditors often double-check traditional pensions, so fewer viruses creep in there. Higher levels of error infect company-run 401(k) and profit-sharing plans, says Patrick Byrnes, president of Actuarial Consultants in Torrance, Calif. Your payout might be figured by a payroll clerk who isn’t up to speed on the plan’s finer points.
Three bright yellow flags should warn you that something might be wrong. (1) Your retirement-plan payout is inexplicably less than your colleagues got. (2) The money seems low for the number of years you worked-suggesting that, like GTE, your company used the wrong inter-est-rate table. (3) Your company merged or got a new pension-plan administrator-of-ten the start of a royal muck-up. What can go wrong? Let me count the ways:
If you have a 401(k): A clerk might not post a contribution. Over time, that will grow to a major loss.
If you have a profit-sharing plan: You might receive the wrong percentage contribution. When you leave, your account might not be valued on the proper day.
If you started out in a union plan and then moved to management: Your union credits might be forgotten. The same thing can happen to a worker moving from one division of a company to another, when the divisions have separate plans.
If your plan counts “all” compensation toward your pension: It might forget to add bonuses, overtime and commissions.
If your pension is based on your five highest earning years: The computer might assume that those are the last five years you worked-which might not be the case.
If you ever worked part time: Those years might be dropped from your pension calculation. You’re generally covered if you work more than 1,000 hours a year. But some companies accept 500 hours or less, so check it out, says pension attorney Ronald Dean of Palisades Park, Calif.
Employees can’t check the true arcana of pension accounts. But a few errors are pretty easy to catch. For example, with profit-sharing or 401(k) plans, see that the contribution is credited every year. Some employers are lax. about this, says Mary Ellen Signorille of the American Association of Retired Persons.
With most traditional pensions you’re owed an annual statement showing how much your benefit has grown. Check that the company counted all your earnings and hours. (What? You don’t know the hours you worked? That’s why you should keep all your W-2 forms. They prove your work history, which might get lost if your company is sold. W-2s also show what you put into 401(k)s and similar plans.)
If you suspect that your payment is wrong, query the plan administrator. Don’t do it by phone. If you haven’t asked in writing, you haven’t asked. Request all the factors used to calculate your payout, such as your earnings, the benefit formula and the number of years you worked. The wrong birth date or hire date can make a big difference to what you get.
An actuary can tell you whether you’ve been properly paid. A typical fee: a few hundred dollars for traditional plans and more for 401(k)s. The trouble is, hardly anyone has ever seen an actuary. Try your library for the Enrolled Actuaries Directory. But you’ll have to call a string of them to find one who takes individual cases.
If you want to sue-as the widowed Denise Wassenaar did so successfully–the Pension Rights Center (202-296-8776) will send you the names of pension lawyers in your state. They typically charge one third of the money you recover, plus expenses. Or try the NCRB (800-666-1000). It charges nothing to check your claim but takes 50 percent of any money it recovers (25 percent or less, if you had no pension and NCRB secures you one). This firm doesn’t handle any union or government plans.
Don’t delay if you suspect you’ve been underpaid. You don’t want a statute of limitations to cut off your claim. It’s a pain to have to keep checking on whether your company got your pension right. But there’s too much at stake to let it go.
