Auditing Pension Benefit Calculations Across Hard-Copy Participant Files

A Fortune 500 energy services company had a large number of terminated vested and retiree participants whose pension documentation was located in hard-copy files. 

The files were supposed to contain final pension calculation details along with the required supporting documentation. 

Analysis of a sample of the files revealed incomplete calculation details, multiple calculations in many of the files, and files with documents not related to the pension benefits. 

SBA was engaged to verify each pension calculation and ensure that the documentation in each file was complete. 

SBA delivered the following scope of services: 

• Cataloged each file according to: (1) plan; (2) participant status (retiree/terminated); and (3) completeness of the file 

• Developed a strategy for dealing with incomplete files, including how missing and questionable data would be handled 

• Categorized the files to ensure that once a file was marked correct and complete, work would not be duplicated 

• Validated the benefit calculation for all applicable files 

• Created benefit calculations for terminated vested files as needed 

• Confirmed that all required documentation (e.g., spousal consent forms) was present and complete 

• Checked that the termination date, benefit commencement date, date of birth and date of employment matched the data on file 

• Recalculated optional forms of benefits to ensure that early retirement factors and optional form factors were applied to the accrued benefit to determine the benefit commencement amount 

• Verified that each file contained detailed documentation of all benefit rate increases over the retiree's payment period 

• Assured that any documentation related to calculation correction or error resolution was preserved in the files