Pension Inaccuracies Common, Review Shows Auditors Find 13.7 Percent Of Participants Being Underpaid
Millions of Americans are getting pension payments smaller than they have earned because of their employer’s indifference, ineptitude or confusion about the United States’ complex pension laws, according to a special government audit.
The disturbingly high error rate - 13.7 percent of participants being underpaid - was discovered by the Pension Benefit Guaranty Corp. in its pension plan study, the Los Angeles Times has learned.
The problem has worsened dramatically since 1988, when the PBGC audit found that less than 3 percent of participants were underpaid.
“A lot of people are not getting what they earned,” said Sen. Charles E. Grassley, R-Iowa, chairman of the Senate Special Committee on Aging.
“If your paycheck is short, you have no hesitation about going to the employer and saying, ‘You made a mistake,”’ Grassley said, adding workers should have the same aggressive insistence on their pension rights.
Each worker should insist on a statement every two or three years that has full details about how much he or she will collect, and how the pension will be calculated, he said.
Pension accuracy is not just an issue for those who have already retired. Millions of workers leave their jobs each year and collect lumpsum payments representing the value of pensions. Mistakes are plentiful, according to an investigation conducted by the Aging Committee staff.
“If you switch jobs four times in a career and take a lump-sum payment, you could be incredibly unlucky and get hit four times with underpayments,” said Ted Totman, the Aging Committee staff director.
Since 1974, Congress has passed 16 laws regulating pensions. Enforcement is divided among the Labor Department, the Internal Revenue Service and the PBGC.