Work & Life: If in doubt about pension, a pro can help do the math

By H.J. Cummins, Star Tribune

Last update: September 7, 2005 - 11:00 PM

These are skeptical times.

And one of the credibility gaps these days involves pensions -- specifically whether an employer really pays all that was promised.

When in doubt, working Americans now can hire a "personal retirement actuary" to double-check the math on that final send-off.

Like Joseph Gaworski in St. Paul.

An actuary who used to work on the payor side of the equation, Gaworski crossed to the payee side in 2001 -- after he saw so many errors that he figured he could make a living chasing them down.

His Pension Benefit Verification Service has clients scattered from New York to Arizona. He estimated that he finds substantial errors in about half his clients' cases -- that is, substantial enough to more than cover his typical $1,500 to $2,500 fee.

Gaworski may be the first to take personal retirement actuaries into the pension-checking business. More typically they help clients plan money decisions in retirement, based on projected inflation rates, longevity tables and other mathematical guides.

Gaworski predicts that his new kind of service will become standard practice in the next few years, especially for people who stay at one employer for 10 years or more. He's convinced that errors will only increase, and he blames cost-cutting measures he says have led to heavier workloads for human-resource and pension managers, which has allowed more mistakes to creep in.

There's not a lot of research either way on the question. The only government research on the issue was a small study ordered by the Senate Special Committee on Aging in 1997. It came down in the affirmative, finding that 14 percent of the pensioners were being underpaid, compared with 3 percent in 1988.

In his practice, Gaworski said, the mistakes he finds run the gamut. In one case, the employer used the wrong interest rate in converting a lifelong pension to a single, lump-sum payout. In another case, the employer used the wrong mortality table.

One employer got his client's date of employment wrong; another forgot to include bonuses in the income that was the basis for the pension.

In a recent case, a lump-sum payout jumped almost $30,000, to $165,000. The problem there was that his client's pension got lost in a maze of corporate acquisitions and restructurings, he said.

Gaworski said clients typically come to him around retirement age because something about their pensions doesn't feel right. He gives them an estimate -- he charges by the hour, not by commission -- and if they decide to continue, he does his research and prepares a letter they can send to their pension plan administrator. Often, they're denied the first time around, he said. Most appeals don't add much to the cost, he said, but sometimes an attorney is needed, and that does.

It's impossible for him to know whether the problems he finds are innocent errors or deliberate subtractions, Gaworski said -- but more than 90 percent of them were to the employers' advantage.

"So, that gives you a sense that the errors are being structured against the person," he said.

What are your workplace issues? H.J. Cummins is at workandlife@startribune.com. Please sign your e-mails; no names will appear in print without approval.

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