Tens of thousands of people in Ontario who are entitled to more than $3 billion in combined pension benefits aren’t collecting them because pension plan administrators can’t locate them.
Some of the 175,000 “missing” plan members identified by the Financial Services Regulatory Authority of Ontario (FSRA) may have passed away without claiming their pension benefits, while others may be retired but unaware they are entitled to additional retirement savings, said Caroline Blouin, executive vice-president of pensions at FSRA, which regulates retirement plans in Canada’s largest province. Still others may not even have retired yet but have moved to other jobs and are unaware of the benefits they’ve accumulated.
“We are observing that many individuals do not stay connected to their pension benefits as they move through different roles in their working lifetime,” Blouin said.
Retirement plan administrators are required by law to provide members with an annual statement — and even terminated or retired members must be updated every two years as a result of legislation passed in 2017 — but contact can be lost when pensioners or others entitled to benefits fail to update their contact information such as their home or email address.
Often, the assumption is that the employer or government will pass along such details to the plan administrator but that isn’t the way it works, according to FSRA.
“Although various government offices may have your current address, that information has no way of getting to the pension plan administrator as these plans are not operated by the government,” said Blouin.
The scope of the problem started to become clear following the requirement to communicate more frequently with terminated and retired members, she said, and the regulator has been collecting the data from hundreds of company and multi-employer pension plans in Ontario as it considers whether policy or regulatory steps should be taken to tackle the issue.
“We’re getting a better sense of how big this issue is,” Blouin said, noting that FSRA’s latest calculation of “missing” plan members and their entitlements is based on 2022 data.
In the meantime, the regulator is providing guidance to companies and multi-employer pensions that find themselves unable to contact members, including recommended administrative and communications practices.
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“We require pension plans to take additional steps to try to track down missing members,” Blouin said. Only once this is done can a pension administrator apply for a waiver from the required communication frequency.
FSRA is also encouraging Canadians who are members of a pension plan to regularly update their contact information on file as part of a broader campaign to encourage them to take a greater interest in their pensions, including by reading, understanding and asking questions about annual pension statements.
“Thinking about saving for retirement is usually not top of mind in the hustle and bustle of our daily lives, especially for those just starting out in their careers,” Blouin said, adding that losing out on pension savings can “undo” gains from savvy consumer behaviour such as shopping around for the best deal.
“It would be a shame to undo all that effort by failing to do something simple — spending a few minutes ensuring your pension plan has current information on file and updating your plan when you move,” she said.
While it may seem unusual for pension beneficiaries and their estates to lose track of these retirement savings, the Bank of Canada has similarly revealed huge balances found in abandoned bank accounts. In June, the central bank said nearly $1.1 billion in unclaimed balances had accumulated in 2.5 million accounts across the country that had been dormant for more than 10 years.
The Bank of Canada maintains a website that allows anyone to fill in their personal details to check if they have unclaimed bank balances.
There is not a similar portal to track down pension savings.