Fiduciaries have many responsibilities that stem from the duties of care, loyalty and prudence, including ensuring the correct benefits are paid to the correct participants and beneficiaries of the plan. Benefits Magazine authors Lisa L. Kaiser, CEBS, and Carey R. Wooton, CEBS, explain multiemployer retirement plan trustees who are often not benefits professionals must still exhibit diligence. This is done by routinely reviewing their member information and internal processes to ensure that they are correctly paying out benefits. In their article “KYP (Know Your Participant): Multiemployer Retirement Plan Death Audits and Other Processes” in the July/August 2023 issue of Benefits Magazine, Kaiser and Wooton suggest that trustees need to be aware that taking consistent, reasonable steps and following a written policy that has been vetted by the board, legal representation and plan administrator(s) will help to ensure that this fiduciary duty is being fulfilled.

Death Audit Policy

Kaiser and Wooton advise that implementing and following a written death audit policy is a good place to start because an effective policy will better protect the plan from benefit overpayments and also protect the plan in the event of a Department of Labor (DOL) investigation.

But this is only true when the policy is consistently followed, so make sure to train (and refresh the training with) your staff, they add.

A death audit policy should be written clearly and specific to the needs of the multiemployer plan. Kaiser and Wooton provide the following insights on what a death audit policy should include:

  • How the plan collects information about participant and beneficiary deaths
  • How the plan reviews participant records for deaths
  • How the plan processes death records and benefit payments
  • How the plan collects overpayments that may have occurred if a participant died but the plan continued to send benefits
  • Whether the plan uses professional services to assist with participant verification and the role of the service provider (more on professional services below)
  • Which participant categories the plan reviews (more on participant categories below).

Maintaining Participant Data

When crafting a death audit policy, it’s important to include a process for collecting data on not only those currently in “pay status” who are receiving benefits but also their beneficiaries as well as active participants, terminated vested participants and anyone who could have a future benefit, Kaiser and Wooton advise.

Kaiser and Wooton explain that covering all these categories has the following advantages:

  • Records with more up-to-date information for future benefit applications
  • Possibly lower Pension Benefit Guaranty Corporation (PBGC) premiums because the participant count is accurate
  • Reduced possibility of benefit payment errors.

Professional Services

A number of services are available for purchase to assist with participant verification. “These services generally receive a data file from the plan that contains all the personal identification information available on each participant and beneficiary. The service can then compare that data against information from various government and credit agencies and notify the plan of participant deaths, address changes and other demographic information. If your plan purchases such a service, carefully review the vendor agreement so that you know which services are included and which may be à la carte for your plan, then use them to your best advantage,” Kaiser and Wooton write. These services are not foolproof, and a plan should not rely solely on them to keep its participant data up to date, Kaiser and Wooton caution.

Kaiser and Wooton noted that plans should be aware of the following when using participant verification services:

  • While the services rely on the government and credit agencies for their information, the information is not always reported fully, accurately or in a timely manner.
  • Some states have passed privacy laws that prevent death notification and prevent third parties from accessing death records for up to 50 years. The Social Security Administration (SSA) has a publicly available Death Master File that has been a major source of information on when recipients have died. But state death records have been withdrawn from the file because of privacy restrictions, so it is not as complete as it once was.
  • Data can be delayed.
  • Other flaws can come from Social Security number mismatches, name mismatches, an incorrectly entered date of birth and so on.
  • Frequent critical review of data returned and comparing that data with data from other sources will enhance reliability.

Even with some of the known flaws and depending on the plan’s needs, the authors point out that using a professional participant data verification service is often a strong base for creating a death audit policy. Most services can provide an automatic, daily report to the benefit office, which provides a continuous update as deaths occur.

Authors’ pro tip: Set up routine data feeds to this vendor to ensure that it is reviewing your actual, full participant database—not static or outdated information.

Other Internal Processes

Regardless of whether a plan chooses to use a professional service to assist with keeping its participant data up to date, it is necessary to have strong internal processes to ensure that benefits are properly paid, Kaiser and Wooton contend. Other internal processes that may help participant verification efforts include comparing retirement records with other fund benefit records, having a procedure for handling undeliverable mail or monitoring social media groups, they add. An ongoing audit of plan records will ensure that the right participants and beneficiaries continue to receive the benefits they are due while helping the plan avoid overpayments.

Keep Data Current It’s important for the plan administrator, trustees and legal counsel to work together to review and implement processes to be in compliance with the Employee Retirement Income Security Act of 1974 (ERISA) and any other applicable laws or regulations.

Jenny Gartman, CEBS

Senior Content & Information Specialist at the International Foundation Favorite Foundation Member Service: Personalized Research Service Benefits Topics That Interest Her Most: Mental health and retirement security Personal Insight: Jenny likes spending time with family, knitting, reading memoirs and going for walks around the neighborhood.

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