New Insights into the Problem of Missing Participants

By Neal Ringquist
Published on March 13, 2018

New Insights into the Problem of Missing ParticipantsToday, Boston Research Technologies (BRT) and Retirement Clearinghouse (RCH) issued a joint press release announcing the key findings from a survey examining the retirement industry’s missing participant problem.  The survey, The Mobile Workforce’s Missing Participant Problem, is the first to examine the problem from the perspective of the participant and offers unique insights into its various dimensions.

The missing participant problem

In a retirement savings plan, participants become “missing” when they change jobs and relocate, but fail to update their contact information.  Over time, the problems caused by these missing participants escalate – from younger participants who may not receive plan mailings -- to older participants nearing retirement, who may not receive plan benefits. 

Missing participants present a dilemma for plan sponsors.  With fiduciary responsibility to determine who is missing and to find them, sponsors may face DOL enforcement actions if their efforts are deemed insufficient, yet are given inadequate guidance in conducting searches -- with the notable exception of a plan termination. In addition, plan sponsors have multiple regulatory agencies with missing participant requirements to keep track of, such as the IRS and PBGC, not just the DOL.

While the plan sponsor’s dilemma is well-known, until this survey little was known about the problem from the perspective of the participant.

Survey approach

The survey, conducted in February 2018 by Boston Research Technologies, interviewed 1,000 participants who had participated in at least one retirement plan with a prior employer, and included questions designed to understand the magnitude of the missing participant problem, as well as its behavioral and demographic dimensions. 

Key findings

  • The overall magnitude of the missing participant problem is large.

    11.3% of terminated participant accounts had a stale address.
  • Not surprisingly, relocations will frequently result in missing participants.

    20% of participant relocations results in a stale address record.
  • Low income households are twice as likely to have missing participants.

    18.7% of terminated participant accounts associated with participants with household income below $50,000 did not have a current address on file, compared with 9.1% of accounts of participants with household income above $50,000.
  • Millennials are more likely to be “missing” than their Generation X or Baby Boomer counterparts.

    15.6% of Millennial accounts left with a prior employer plan had a stale address, compared with 8.5% for Gen X stranded accounts, and 5.9% of Baby Boomer stranded accounts. 

The strongest predictor of the account not being lost was the respondent’s knowledge of how to contact the company holding the account - accounts held by respondents who reported being able to do this were almost 7 times less likely to be lost.

Participants prefer an automated process

Another interesting result from the survey is that participants prefer an automated solution to updating addresses, or consolidating accounts – a move that removes the need to update an address. According to the survey, 60% of participants would prefer an automated process to update their address, or consolidate their accounts upon job change, while only 23% would utilize a lost & found database.

A potential solution

Finally, the survey reveals a potential untapped resource for correct address data – the participants active plan. The study found that the probability of locating a missing participant from an active participant record is 67%.

Click here to download the full survey results.