Pension and Welfare Benefits Administration:

Opportunities Exist for Improving Management of the Enforcement Program

GAO-02-232: Published: Jan 29, 2002. Publicly Released: Mar 15, 2002.

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The Pension and Welfare Benefits Administration (PWBA) safeguards the economic interests of more than 150 million people in six million employee benefit plans. To enforce the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), PWBA investigates employee benefit plans, conducts public education, and has begun a new voluntary correction program. Through its plan investigations, PWBA detects and corrects violations and has a deterrent presence that will prevent future violations. The Office of Enforcement prescribes areas for its regions to investigate. Regional offices have considerable flexibility in implementing PWBA's enforcement strategy by focusing most of their investigations on local issues. Although PWBA has taken steps to strengthen its enforcement activities, GAO found weaknesses in PWBA's enforcement strategy management and investigative process, its overall human capital management, and its measures for addressing program performance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Employee Benefits and Security Administration (EBSA, formerly the Pension and Welfare Benefits Administration) agreed that human capitol planning efforts were not reflected in a comprehensive document and cited various current and planned initiatives related to human capital management and succession planning. EBSA provided its Human Capital Strategic Management Plan, which outlined goals and efforts related to employee workforce analysis, training needs assessment, and how to adapt in a rapidly evolving environment. GAO believes that the plan addresses this recommendation.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Program Planning, Evaluation, and Management to improve PWBA's human capital functions by conducting a comprehensive review of PWBA's future human capital needs, including the size and shape of the workforce; the knowledge, skills, and abilities needed; succession planning challenges; and staff deployment issues.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: In March 2002, GAO reported that PWBA had not realized the expected level of participation in their Voluntary Fiduciary Correction (VFC) program, which encourages plan officials to identify and correct ERISA violations on their own. PWBA anticipated that up to 700 plans would apply for and use the program, however, only 37 plans submitted applications for the program as of July 2001. GAO reported that certain requirements, such as notifying plan participants of potential violations, and levying excise taxes on prohibited transactions may hinder participation in the VFC program. Because PWBA expects the VFC program to promote overall compliance with ERISA, GAO recommended that PWBA monitor and analyze barriers to participation in the program, and explore ways to reduce them. PWBA agreed to submit a final VFC description to the Office of Management and Budget, and provide GAO with a copy upon its release. In the revised VFC description, PWBA modified key features of the program including the elimination of notice requirements to participants and the availability of a limited excise tax exemption for those who participate in the program. PWBA expects these amendments to increase participation in the VFC program.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Enforcement to improve its oversight role in key areas, such as monitoring and analyzing the barriers to participation in the Voluntary Fiduciary Correction program and explore ways to reduce them.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: The Employee Benefits Security Administration (formerly the Pension and Welfare Benefits Administration) agreed that a quality review program is important. A team consisting of Office of Enforcement and field managers has developed a closed case quality review program that focuses on substantive technical issues and is reported centrally. This system was implemented in fiscal year 2003.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Enforcement to improve its oversight role in key areas, such as developing a closed case quality review process that ensures the independence of reviewers and sufficiently focuses on substantive technical case issues.

    Agency Affected: Department of Labor

  4. Status: Closed - Implemented

    Comments: The Office of Enforcement under the Employee Benefits Security Administration (EBSA, formerly known as the Pension and Welfare Benefits Administration) formed a "Best Practices Sharing Team" comprised of three Office of Enforcement staff members and a representative from each region. The team has developed an intranet web site that will allow EBSA investigators to share best practices such as investigative plans, subpoenas, letters, investigative guides, etc. In addition, the team continues to explore avenues for sharing practices among the regions.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Enforcement to improve its oversight role in key areas, such as coordinating the sharing of "best practices" information among regions relating to the optimum and most productive techniques for selecting and conducting investigations.

    Agency Affected: Department of Labor

  5. Status: Closed - Implemented

    Comments: The Employee Benefits Security Administration (EBSA, formerly the Pension and Welfare Benefits Administration) agreed to perform reviews of sources of cases that lead to investigations on a regular basis, to the extent permitted by resources. EBSA provided copies of its Case Openings and Results Analysis (CORA) from fiscal year (FY) 2001, and more recently from FY 2002. GAO believes that these reports adequately address this recommendation.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Enforcement to improve its oversight role in key areas, such as institutionalizing and conducting regular reviews of the sources of cases that lead to investigations.

    Agency Affected: Department of Labor

  6. Status: Closed - Implemented

    Comments: The Employee Benefits Security Administration (EBSA, formerly the Pension and Welfare Benefits Administration) identified several activities that indicate its ongoing approach and commitment to developing a cost-effective strategy for assessing the level and type of ERISA noncompliance among employee benefit plans. In 2003, the DOL issued its report on the results of the fiscal year 2001 compliance study, a comprehensive review of group health plans compliance with 42 specific requirements of the new health laws. In 2003, DOL conducted another national study focusing on compliance with ERISA Part 7 requirements, focusing on large multiemployer health plans. These studies provided details on the level and type of noncompliance with ERISA Part 7 requirements among a significant percentage of DOL's multiemployer plans. DOL's office of enforcement is currently conducting another national assessment project of pension plans with employee contributions and has reiterated its committment to further compliance reviews based on budget and resources.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Enforcement to improve its oversight role in key areas, such as developing a cost-effective strategy for assessing the level and type of ERISA noncompliance among employee benefit plans. Such a strategy should include an assessment of the feasibility of using sampling and/or segmenting the plan universe to allow PWBA to determine the level of noncompliance with an acceptable level of confidence.

    Agency Affected: Department of Labor

  7. Status: Closed - Implemented

    Comments: The Employee Benefits and Security Administration (EBSA, formerly known as the Pension and Welfare Benefits Administration) convened a management committee to reevaluate the performance rating system and new standards for field investigators/auditors were put into place in fiscal year 2003. The new rating system standards provide new emphasis on quality as well as productivity and impact of investigations.

    Recommendation: To improve the agency's management of the enforcement program, the Secretary of Labor should direct the Assistant Secretary of Labor, PWBA, to direct the Office of Program Planning, Evaluation, and Management to improve PWBA's human capital functions by reevaluating the performance rating system for enforcement staff to ensure that case complexity and teamwork issues receive sufficient emphasis.

    Agency Affected: Department of Labor

 

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