by John E. Motylinski (Spring 2016)

When pensioners go missing, pension funds are often left with administrative and legal headaches. One of these headaches is determining how much effort should go into finding the missing participant. While funds cannot sit idly by and hope that the member resurfaces, funds also cannot be expected to conduct a dragnet search for the missing pensioner. However, by following the approaches described below, pension funds will act in harmony with their fiduciary duties and minimize administrative costs in searching for missing pensioners.

Why must a pension fund track its missing members?

Even though there is no express provision in the Illinois Pension Code that requires pension fund fiduciaries to conduct a reasonable search for missing participants, this duty can be triangulated from the express duties imposed on pension fund fiduciaries. One such duty is to use reasonable care, skill, and prudence in managing the fund’s affairs. Another duty is to provide benefits to participants and their beneficiaries. When these two duties are taken together, it is clear that reasonable efforts should be taken to locate missing participants so that the fund can fulfill its charge to provide benefits to them.

What minimum steps should a fund take to locate missing members?

Other than the rather opaque charge to “act reasonably,” the Illinois Pension Code does not offer any guidance for fiduciaries attempting to find a missing member. However, fiduciaries can look to the federal Employee Retirement Income Security Act of 1974 (“ERISA”) for guidance, as Illinois courts often do in situations where the Illinois Pension Code is silent. In fact, ERISA case law and administrative guidance is very persuasive in this context because ERISA imposes many of the same fiduciary duties as those present in the Illinois Pension Code. Therefore, when dealing with missing pensioners, Illinois pension funds can learn from the ways in which ERISA has been interpreted.

Luckily for Illinois pension fund fiduciaries, the United States Department of Labor has issued guidance on what constitutes a minimally “reasonable” search for missing participants under ERISA. In dealing with missing pensioners, the Department of Labor recommends — at minimum — that fiduciaries take the following steps:

  • Use certified mail: Sending certified mail provides two main benefits. First, should the mail be returned undeliverable, the fund will know conclusively that the pensioner is not available at the address on file. Second, certified mail is inexpensive and easy to access. For these reasons, sending a certified letter should be one of the first steps a fund takes when it suspects a member is missing.
  • Check the municipality’s records: Before departing, employees sometimes leave their contact information with their former employers for insurance continuation purposes or for final payroll arrangements. Thus, Illinois funds are encouraged to check with their municipality to see if it has any up-to-date information for the member.
  • Check with designated beneficiaries: Pension funds can also reach out to designated beneficiaries, such as spouses or children, to track down missing pensioners. The downside to this approach is that it may implicate privacy concerns. However, even where designated beneficiaries are hesitate to produce the whereabouts of the missing member, pension funds are well within their rights to ask that their letters be forwarded on to the pensioner.
  • Consult electronic search tools: Pension funds can make use of free online search tools to aid in their search. Indeed, a surprising amount of information can be learned from searches on Google, Facebook, LinkedIn, and other such websites. Additionally, publically available information from county recorders’ offices, tax assessors, and court records may prove useful.

Can pension funds do beyond these minimum search steps?

In most cases, pension fund fiduciaries will likely find that use of the methods described above will yields positive results. However, every situation is unique, and there may be times when the pension fund is required to undertake additional steps to act reasonably under the circumstances. These additional steps might include the use of paid Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and private investigators.

However, fiduciaries must be cautious when considering the use of expensive search techniques. While pension fund fiduciaries have an obligation to provide benefits to participants, it is important to remember that they also have a duty to minimize expenses of administering the retirement system or pension fund. Thus, pension fund fiduciaries must keep these dueling duties in mind when contemplating going above and beyond the minimum steps recommended above.