07/21/97 IS YOUR PENSION ALL IT SHOULD BE?

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IS YOUR PENSION ALL IT SHOULD BE?
Small procedural errors have resulted in enormous losses
For nearly 38 years, Ginny Burton crunched numbers at Lord & Taylor's Manhattan department store. Then, in 1993, her bookkeeping job was phased out and she retired. When she left, she received her retirement benefits in a lump sum of $110,000--a figure she didn't think to question until a friend referred her to the National Center for Retirement Benefits Inc. (NCRB) at 800 666-1000.
The Northbrook (Ill.) company reviews payouts from pension, 401(k), and profit-sharing plans. If NCRB discovers an error, it keep 30% of any money it recovers. Since there was no upfront fee, Burton figured there was nothing to lose. ''Most of something is better than zilch,'' jokes Burton, now 73. Through the sleuthing of NCRB founders Paul Holzman and Allen C. Engerman, who refer to themselves as the ''pension detectives,'' A year later, Burton received an additional $60,000.
GOOFS. While most of the 45 million Americans covered under pensions take for granted that the lump sum or monthly payout they receive upon retiring or changing jobs is correct, there is increasing evidence that they shouldn't. Since founding NCRB in 1993, ex-Internal Revenue Service agent Holzman and Engerman, a former Chicago prosecutor, have recovered millions from the pension plans of such companies as Frito Lay, Continental Airlines, International Paper, and Times Mirror. Half of the pension payouts NCRB investigates result in more money for employees.
Mistakes are almost inevitable, considering the complicated calculations used to determine benefits and the constantly changing pension and tax laws. Intentional fraud is rare, say pension actuaries and attorneys. The bulk of errors result from simple miscalculations or other administrative mistakes such as using inaccurate compensation or employment records, says Brian Graff, executive director of the American Society of Pension Actuaries. But little mistakes can cause big problems. NCRB found that incorrect interest-rate assumptions had shortchanged 7,130 GTE employees to the tune of $18 million.
Employees such as Burton, who work past retirement age, are especially vulnerable. Burton's employer failed to inform her that working longer might have a negative impact on her pension benefits. Companies use a shorter life expectancy for workers over 65, which reduces the number of years benefits will be paid once the employee retires. Because Burton was not properly notified, her benefits were restored. The May Department Stores Co., which owns Lord & Taylor, says it is trying to identify other employees who might be owed pension money.
''TRUST, BUT VERIFY.'' It's difficult even for financially savvy folks to figure out if they are getting their full share. No government agencies exist to investigate--and recover--individual claims. Your best bet is either a pension attorney, who will bill you for expenses and about one-third of any money recovered, or a benefits detective firm. ''Trust, but verify'' advises Senator Charles E. Grassley (R-Iowa), chairman of the Senate Special Committee on Aging.
If you suspect your pension payout is incorrect, you have six years from your first payment to investigate. First, make a written request for a summary of the plan and all the variables used to calculate your benefits. Keep a pension file, including a list of all employers, dates of service, and benefit and earnings statements, suggests Judith Welles, director of communications at Washington-based Pension Benefit Guaranty Corp., which insures defined benefit plans. For a description of your pension rights, contact the Labor Dept.'s Pension & Welfare Benefits Administration (800 998-7542).
Proposals are before Congress to simplify understanding retirement plans. For now, Engerman cautions: ''Don't assume that just because it is a large sum of money, it is the correct sum of money.'' That can be a costly assumption.
By Kerry Capell in New York

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