Retirement Security:

Incomplete Participant Data Affect Reliability of Values Placed by Actuaries on Multiemployer Pension Plans

HRD-84-38: Published: Sep 6, 1984. Publicly Released: Sep 6, 1984.

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GAO evaluated the effect of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) on employers, participants, and others. Specifically, GAO reviewed the development and reporting of actuarial information.

GAO found that, although pension plan participant data are crucial in determining the actuarial value of pension plans, many multiemployer plans lack complete participant data, causing liabilities and costs of some plans to be understated or overstated by millions of dollars. Nevertheless, pension plan officials continue to use these data to manage and operate plans. This information is also being reported to government agencies for their use in administering and enforcing MPPAA and the Employee Retirement Income Security Act (ERISA). Actuaries usually disclose the extent of missing participant data, but few indicate whether such omissions affect the accuracy of the actuarial valuations.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretary of Labor should issue regulations, under its ERISA authority, to provide guidance for the maintenance of participant data by pension plans. The Secretary should also expand the scope of Labor's audits of compliance with fiduciary standards to include a review of actuarial valuation reports so enforcement personnel can ascertain whether participant data on multiemployer pension plans are sufficiently complete to enable the actuaries to make reliable actuarial valuations.

    Agency Affected: Department of Labor

    Status: Closed - Not Implemented

    Comments: Labor decided, in November 1984, to take no further action on this recommendation. It believes that it is better for the Joint Board and actuarial societies to develop criteria and standards for participant data sufficient to make reliable actuarial determinations.

    Recommendation: The Commissioner of Internal Revenue should expand Internal Revenue Service enforcement efforts to include examinations of actuarial valuation reports to identify multiemployer pension plans lacking sufficient participant data.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretaries of Labor and the Treasury should direct the Joint Board for the Enrollment of Actuaries to promote action by and work in cooperation with the actuarial profession to develop appropriate criteria and standards for the disclosure of the potential effect of material amounts for missing participant data on the reliability of actuarial valuations.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretaries of Labor and the Treasury should direct the Joint Board for the Enrollment of Actuaries to promote action by and work in cooperation with the actuarial profession to develop appropriate criteria and standards for the disclosure of the potential effect of material amounts for missing participant data on the reliability of actuarial valuations.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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