Pension Plans:

Labor Should Not Ignore Some Small Plans That Report Violations

HRD-93-45: Published: Mar 26, 1993. Publicly Released: Apr 28, 1993.


Joseph F. Delfico
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Pursuant to a congressional request, GAO provided information on the Department of Labor's (DOL) corrective actions concerning prohibited pension plan asset use, focusing on: (1) whether DOL and the Internal Revenue Service (IRS) adequately identified and acted on reported information about possible violations; and (2) those agencies' procedures and practices for resolving apparent violations.

GAO found that: (1) DOL did not take any enforcement actions against five small pension plans that reported apparent prohibited uses of funds, and could not ensure that it would act on similar future violations; (2) DOL database errors have resulted in unreliable data, and DOL cannot use those databases to adequately target plans; (3) the DOL enforcement targeting system automatically screens out a substantial number of small plans and focuses on only larger plans; (4) of the 11 plans GAO reviewed, 9 sponsors had corrected their funding deficiencies, or IRS had identified the deficiencies and taken appropriate corrective actions; and (5) current IRS procedures are adequate for correcting funding deficiencies reported by pension plans.

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

    Recommendation for Executive Action

    Recommendation: The Secretary of Labor should direct the Assistant Secretary for Pension and Welfare Benefits to eliminate the automatic exclusion of certain small plans by the targeting programs that address prohibited fund uses.

    Agency Affected: Department of Labor

    Status: Closed - Implemented

    Comments: The Pension and Welfare Benefits Administration eliminated, from its computerized targeting parameters, restrictions relating to the size of pension plans.

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