Better Management of Private Pension Plan Data Can Reduce Costs and Improve ERISA Administration

HRD-82-12: Published: Oct 19, 1981. Publicly Released: Oct 22, 1981.

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The Department of Labor, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) are responsible for administering and enforcing the Employee Retirement Income Security Act (ERISA). Private pension plans are required to report substantial information to these agencies under the act. GAO investigated the ERISA information management activities of Labor, IRS, and PBGC to determine the adequacy and effectiveness of: (1) the agencies' efforts to make sure that pension plans file ERISA annual reports, annual premium filings, and summary plan descriptions; and (2) IRS efforts to ensure that annual reports filed by plans are complete.

Information required to be reported annually by private pension plans is not being effectively, efficiently, or economically managed. Although the agencies believe that almost all of the required annual report information is critical for them to administer the act, GAO found that some plans may not be filing reports and that many of the reports filed are incomplete. In 1979, both Labor and IRS attempted to ensure that the plans filed reports. These efforts wasted labor and resources and irritated plan administrators. The agencies did not use all the information on reports filed nor did they establish controls to ensure that data they used were accurate. When information was missing from reports filed, IRS did not take adequate action to obtain the missing data and accepted reports with critical information items missing. GAO found no evidence that IRS plans to take more forceful action to obtain information missing from filed reports. PBGC has not made certain that insured plans pay required premiums every year, or at all, and does not use ERISA annual report information for collecting unpaid premiums; thus, millions of dollars in premiums may have been lost. The extent to which planned improvements can be implemented is questionable because of the restricted ability of PBGC to overcome unreliable data with limited resources. Both IRS and PBGC are paying for improving and maintaining the accuracy of data for the same plans on two separate files, and there is an additional cost for their reconciliation. Filing plan summaries with Labor is costly and unnecessary.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Follow-up on this recommendation should be discontinued. Congress has taken no action on this recommendation. In accordance with the GAO Project Manual, GAO follow-up on recommendations to Congress should be considered satisfied when Congress has not acted on the recommendation in over 22 months.

    Matter: Congress should amend ERISA to: (1) eliminate the requirement that employee benefit plans routinely file copies of plan descriptions and plan summaries with Labor; (2) require the plans to provide Labor with copies of plan summaries at the request of Labor; and (3) require Labor to obtain, on behalf of plan participants and others, copies of plan summaries from the plans when so requested. Congress should make these amendments before plans have to meet summary refiling requirements in 1982.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Please call 202/512-6100 for information.

    Recommendation: The Secretaries of Labor and the Treasury and the Executive Director of the PBGC should reassess the need for each annual report information item and eliminate the reporting requirement for those not needed to carry out the overall participation protection goals of ERISA.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: Please call 202/512-6100 for information.

    Recommendation: The Secretaries of Labor and the Treasury and the Executive Director of the PBGC should reassess the need for each annual report information item and eliminate the reporting requirement for those not needed to carry out the overall participation protection goals of ERISA.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Please call 202/512-6100 for information.

    Recommendation: The Secretaries of Labor and the Treasury and the Executive Director of the PBGC should reassess the need for each annual report information item and eliminate the reporting requirement for those not needed to carry out the overall participation protection goals of ERISA.

    Agency Affected: Pension Benefit Guaranty Corporation

  4. Status: Closed - Implemented

    Comments: Please call 202/512-6100 for information.

    Recommendation: The Commissioner of Internal Revenue should implement procedures to ensure that information items needed for the annual report are obtained, including invoking penalties when plans fail to provide the information.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  5. Status: Closed - Not Implemented

    Comments: PBGC and IRS have determined that it would not be cost-effective for IRS to assume responsibility for both receiving and processing premium collections and annual report information. PBGC and IRS also plan to reconcile differences between the annual report and premium files. Therefore, this recommendation should be dropped.

    Recommendation: The Executive Director of PBGC and the Commissioner of Internal Revenue should establish and carry out a timetable for IRS to assume responsibility for receipt and processing of both premium collection and annual report information and, while these steps are being taken, undertake a cooperative effort to reconcile the differences between the annual report and premium files. The Executive Director should take action to collect unpaid premiums identified by this effort.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  6. Status: Closed - Not Implemented

    Comments: PBGC and IRS have determined that it would not be cost-effective for IRS to assume responsibility for both receiving and processing premium collection and annual report information. PBGC and IRS also plan to reconcile differences between the annual report and premium files. Therefore, this recommendation should be dropped.

    Recommendation: The Executive Director of PBGC and the Commissioner of Internal Revenue should establish and carry out a timetable for IRS to assume responsibility for receipt and processing of both premium collection and annual report information and, while these steps are being taken, undertake a cooperative effort to reconcile the differences between the annual report and premium files. The Executive Director should take action to collect unpaid premiums identified by this effort.

    Agency Affected: Pension Benefit Guaranty Corporation

 

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