TN 1 (07-04)
RM 03201.005 SSA's Role in Assisting Private Pension Plans
Under current benefit formulas, Social Security retirement benefits are designed to replace only 42% of a low wage-earner's pre-retirement earnings and only 42% of an average wage-earner's pre-retirement earnings. SSA furnishes needed information to private pension plan administrators and the workers participating in those plans.
Private pension plans
cover more than 44 million workers.
provide pensions to 8.0 million participants replacing (on the average) about 20% of a worker's pre-retirement earnings.
provide benefits for surviving spouses of pension plan participants, whose income is usually substantially reduced upon death of a pensioner or worker.
1. BEFORE 1974
Since 1948, SSA has provided information from its earnings records to private pension plan administrators. Detailed annual earnings amounts of participants in the specific pension plan are used by the pension plan to determine the worker's eligibility and pension amount. In plans to which more than one employer contributes, the earnings information may also be used to allocate pension costs among the employers.
References: See chapter RM 014 for further discussion of how, and under what conditions, a worker's earnings history is provided to pension plans.
2. BEGINNING WITH 1974
On September 2, 1974, the Employee Retirement Income Security Act of 1974 — commonly referred to as ERISA — was enacted. ERISA introduced provisions to protect the pension benefit rights of workers. These included special reporting requirements concerning funding, investment, and accrued benefits due participants. This act also required SSA to:
obtain information reported to IRS by pension plan administrators about participants who have left work covered by a plan but who have earned a right to future pension benefits under the plan. Such benefits are called “vested benefits.” The information reports must include the name and address of the plan administrator, name of the plan, name and SSN of terminated employees with vested benefits, and the amount and type of benefit.
notify claimants for monthly title II benefits, the lump-sum death payment, or hospital insurance benefits under title XVIII of any information SSA has on file about their vested pension benefits or about the vested pension benefit of the NH upon whose record the claimant filed application.
provide to number holder (NH), upon request, information SSA has on file about NH's vested pension benefits; or if NH has died, provide requested information to individuals entitled to any underpayment due the deceased NH.
3. CHANGES TO ERISA PROCESSING – IMPLEMENTATION OF EFAST EFFECTIVE 2004
Starting it June 2004, SSA is processing the Schedules SSA and Form 5500 that have been transferred electronically to SSA since the year 2000.
In providing notification to claimants and others upon request, SSA is to:
provide clear, accurate, and prompt ERISA notices.
reply promptly to inquiries about SSA ERISA notices, SSA's role in ERISA matters, or general non-technical aspects of ERISA that can be answered by general information available in POMS or other available public information materials.
refer inquiries, where appropriate, to proper source for technical information about ERISA provisions. (See RM 03270.005 – RM 03270.007).
safeguard the privacy rights of all workers for whom SSA has pension information on file. See GN 03301.005 ff. for rules governing access to an individual's record maintained by SSA.