Beyond Missing: Targeting Unresponsive Participants in Retirement Plans

By Tom Hawkins | April 30th 2025

In the retirement plan industry, we frequently discuss the challenges posed by missing participants – those former employees with outdated contact information. However, a related phenomenon often receives less attention: unresponsive participants.

As plan sponsors contend with fiduciary responsibilities, this silent subset of participants presents unique challenges that require targeted solutions.

Defining the Unresponsive Participant Challenge
Unresponsive participants are those for whom a plan has correct contact information, but who fail to respond to plan communications. Unlike truly missing participants with incorrect addresses, these individuals receive communications but choose not to act on them.

This distinction is important because the strategies needed to identify and address unresponsive participants differ from those used for truly missing participants. With unresponsive participants, the challenge is not finding them – it’s engaging them.

The Surprising Scope of Unresponsiveness
Several statistics illustrate the potential scope of unresponsive participants:

• The Department of Labor estimates that approximately $15 million in distribution checks goes unclaimed each year.
• Multi-year data data from one mega-plan sponsor with over 250,000 participants revealed that around 10.5% of requested distribution checks for balances under $1,000 went uncashed and required eventual resolution.
• According to a 2018 GAO Report, from 2004 to 2013, more than 25 million participants in workplace plans left at least one retirement account behind when changing jobs, highlighting the massive challenge of participant engagement following employment transitions.

What Causes Participant Unresponsiveness?
Here are six key factors that can contribute to unresponsive participants:

1. Process Flaws: The distribution payment process itself is inherently problematic, relying on an antiquated medium (physical checks), unreliable distribution systems (mail), and the unpredictable behaviors of terminated participants.
2. De Minimis Balances: Participants with small balances often lack sufficient motivation to act. This is especially true for mandatory distributions under $1,000, which frequently go uncashed.
3. Lack of Awareness: Many participants, particularly those auto enrolled in plans, may not even realize they have a retirement account with a former employer. Research from Boston Research Technologies found that 32.8% of participants had learned of a savings account in an employer plan they didn't know they had.
4. Procrastination: Some participants simply procrastinate, intending to act but never follow through, especially when the process seems complex or time-consuming.
5. Skepticism: In an era of increasing financial fraud, some participants may mistrust communications they receive, particularly those requesting action on financial accounts.
6. Diminished Capacity: Some participants may have cognitive or physical issues, resulting in a diminished capacity to care for themselves or act in their own interests, and may not have sufficient support from friends, family or caregivers.

Best Practices for Minimizing Unresponsive Participants
Based on industry experience and regulatory guidance, plan sponsors should consider adopting the following best practices:

1. Perform Periodic Record Updates: Regularly update participant records, employing cost-efficient electronic searches that increase the likelihood of successful communication.
2. Increase Search Intensity, When Required: Sometimes, the only viable way to identify unresponsive participants is to perform intensive searches complete with outbound mailings and/or outbound calling, with the goal of achieving the “gold standard” of direct participant verification. If that fails, a follow-on certified mail search can demonstrate to regulators a thorough, diligent process to reach participants due benefits was undertaken.
3. Overcome Skepticism with Clear, Action-Oriented Communications: Ensure all participant communications clearly identify the sender, the action required, and the consequences of inaction.
4. Document All Outreach Efforts: Maintain comprehensive records of all attempts to engage unresponsive participants, including dates, methods, and outcomes.
5. Utilize Automatic Rollovers for Sub-$1,000 Balances: For sub-$1,000 balances, include these in automatic rollover programs, rather than issuing checks that may go to unresponsive participants and remain uncashed.
6. Adopt Auto Portability: Auto portability, as delivered by the Portability Services Network (PSN), automatically searches for an active defined contribution account at a current employer and seeks to consolidate small balances, while operating on a negative consent basis.

Targeting the Unresponsive
By implementing effective identification, engagement, search and consolidation strategies, plan sponsors can reduce the incidence of unresponsive participants, protecting themselves from regulatory scrutiny, and helping ensure that participants receive the benefits they have earned.

Forward-thinking plan sponsors would be wise to address this issue now, implementing measures that both satisfy regulatory requirements and serve the best interests of participants.