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    Subject Term: "Pension plans"

    5 publications with a total of 16 open recommendations
    Director: Jeszeck, Charles A
    Phone: (202) 512-7215

    1 open recommendations
    Recommendation: Congress should consider establishing an independent commission to comprehensively examine the U.S. retirement system and make recommendations to clarify key policy goals for the system and improve how the nation can promote more stable retirement security. We suggest that such a commission include representatives from government agencies, employers, the financial services industry, unions, participant advocates, and researchers, among others, to help inform policymakers on changes needed to improve the current U.S. retirement system.

    Agency: Congress
    Status: Open

    Comments: When we determine what steps the Congress has taken, we will provide updated information.
    Director: Rusco, Franklin W
    Phone: (202)512-3841

    2 open recommendations
    Recommendation: The Board of Directors should ensure that TVA better document and communicate its goals to reduce its debt and unfunded pension liabilities in its performance plans and reports, including detailed strategies for achieving these goals.

    Agency: Tennessee Valley Authority
    Status: Open

    Comments: TVA concurred with this recommendation and said it would take steps to implement it. When we confirm what actions the TVA has taken in response to this recommendation, we will provide updated information.
    Recommendation: The Board of Directors should ensure that TVA propose, and work with the TVA Retirement System board to adopt, funding rules designed to ensure the plan's full funding.

    Agency: Tennessee Valley Authority
    Status: Open

    Comments: TVA neither agreed nor disagreed with this recommendation. We continue to believe action is needed and will monitor TVA's efforts to address it.
    Director: Charles Jeszeck
    Phone: (202) 512-7215

    5 open recommendations
    Recommendation: To ensure that federal regulators have better information about lump sum windows and to better ensure that participants have ready access to key information they need to make a decision when presented with a lump sum offer, the Department of Labor should require plan sponsors to notify DOL at the time they implement a lump sum window offer, including the number and category of participants being extended the offer (e.g., separated vested; retiree) as well as examples of the materials provided to them.

    Agency: Department of Labor
    Status: Open

    Comments: The Department of Labor (DOL) agreed that this type of information may be helpful in determining the extent to which lump sum window offers are made, as well as the types of disclosures the participants receive. However, DOL reported that it has not identified authority under ERISA for it to impose such a requirement on plan sponsors either before or shortly after the plan offers the lump sum window. The agency states that ERISA expressly provides specific reporting and disclosure requirements. These include various filings, such as annual financial reports, reports upon plan termination, and reports upon making certain transfers of pension plan assets to health benefit accounts. The agency believes ERISA does not require plans to notify them regarding the benefit distribution options they offer or changes in those options, and does not read the broad rulemaking authority in ERISA in Section 505 (general regulations) and Section 110 (pension reporting and disclosure) as authorizing EBSA to establish the notice filing requirement GAO recommended. The agency also commented that ERISA expressly requires that most pension plans file a Form 5500 annual report with the statute specifying the required contents of this annual report in some detail and requiring ?such other financial and actuarial information as the Secretary may find necessary or appropriate.? Although the agency noted it could, by regulation, require reporting on lump sum window offers on the Form 5500, there would be a substantial time lag because ERISA by statute establishes the reporting cycle for the Form 5500 -- the report is not due until 210 days (7 months) after the plan year closes (e.g., for calendar year plans, July 31st of the following year). The agency recognizes that this might not be responsive to the recommendation, which appears to envision a notification system that is relatively contemporaneous with the lump sum window being offered to participants and beneficiaries.
    Recommendation: To ensure that federal regulators have better information about lump sum windows and to better ensure that participants have ready access to key information they need to make a decision when presented with a lump sum offer, the Department of Labor should coordinate with the Internal Revenue Service and the Pension Benefit Guaranty Corporation (PBGC) to clarify the guidance regarding the information sponsors should provide to participants when extending lump sum window offers and place the guidance on the agency's website. Guidance should include clear and understandable presentations of information, such as the relative value of the lump sum, the role and level of protections provided by PBGC, and the positive and negative ramifications of accepting the lump sum. Such guidance could also include promising practices for information materials from plan sponsors which are particularly effective in facilitating informed participant decision-making.

    Agency: Department of Labor
    Status: Open

    Comments: The Department of Labor agreed with this recommendation, noting it is important to coordinate with the Treasury Department/IRS and PBGC to clarify the guidance regarding the information sponsors and other plan fiduciaries should provide to participants and beneficiaries when extending lump sum window offers. In 2016, the agency noted that the manner of publishing that guidance would be part of that coordination process. They may consider some formal public request for input (such as publishing a Request for Information in the Federal Register) and focus group or other field testing work. In addition, the agency noted that the 2015 ERISA Advisory Council announced that one of its projects this year concerns how to give participants effective notices and disclosures concerning lump sum window offers, including possible development of model participant notices. The 2015 Council developed recommendations and model notices on lump sum window offers in "pension risk transfer transactions," and suggested that DOL make the Model Notices available on its web site to plan sponsors and participant advocates and that plan sponsors use the Model Notices when engaging in risk transfer transactions. Similar to other model communications developed by the 2015 Council, the agency believes the model notice could be further enhanced if subjected to broader public input from, for example, plan sponsors, participant advocates, communications experts, and academics. Subject to the limits on its authority in this area and resource constraints. They are considering efforts to obtain public input on the Council's recommendations and model notice. They also intend to contact the Treasury Department/IRS and PBGC to discuss the Council's recommendations.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should review its regulations governing the information contained in relative value statements to ensure these statements provide a meaningful comparison of all benefit options, especially in instances where the loss of certain additional plan benefits may not be disclosed.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should review the applicability and appropriateness of allowing sponsors to select a "lookback" interest rate for use in calculating lump sums associated with a lump sum window that can serve to advantage the interests of the sponsor.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Recommendation: To provide participants with useful information and to provide for lump sums that are based on up-to-date assumptions, Treasury should establish a process and a timeline for periodically updating the mortality tables used to determine minimum required lump sums-- including a means for monitoring when experts' views may indicate that mortality tables may have become outdated, and for taking expedited action if warranted.

    Agency: Department of the Treasury
    Status: Open

    Comments: Treasury generally agreed with this recommendation but did not provide specific comments on plans to address it.
    Director: Jeszeck, Charles A
    Phone: (202) 512-7215

    6 open recommendations
    Recommendation: To increase the accuracy of "potential private pension benefit information" notices that SSA sends to Social Security claimants, Congress should consider legislation shifting responsibility and necessary resources to Labor for (a) electronically collecting form 8955-SSA information on participants' deferred vested benefits, (b) maintaining an accurate federal database of those benefits, and (c) periodically sending SSA accurate information about such benefits for recent Social Security claimants identified by SSA, so that SSA may provide notices to retirees.

    Agency: Congress
    Status: Open

    Comments: As of September 2017, no congressional action has been taken in response to this recommendation.
    Recommendation: To ease the burden on plan sponsors, enhance compliance, and help ensure that disclosures to participants are written in a manner that can be understood by the average participant, Labor, IRS, and PBGC should work together to create and regularly update a comprehensive online tool for plan sponsors to search for the reports and disclosures they are required to provide based on plan type, design, and circumstances.

    Agency: Department of Labor
    Status: Open

    Comments: In November 2013, Labor officials said that they would consult with their colleagues at the Treasury Department/IRS and PBGC regarding creation of one unified online tool for plan adminstrators to search for the reports and disclosures they are required to submit based on a plan's type, design, and circumstances. However, in FY 2014, officials indicated that, although they will continue to consult with their other agency colleagues regarding creation of such a tool, they now tentativley disagree with the recommendation and believe that such a tool could be confusing, especially for small employers. In 2015, Labor raised concerns about this recommendation, continuing to question whether a unified tri-agency online tool would be valuable for sponsors of large pension plans and may be confusing to some plan sponsors, especially small employers. They further noted that they do not believe it would be appropriate for EBSA to adjust its regulatory or guidance priorities at this time or reallocate resources currently dedicated to other priority projects in order to further explore any possible merit of such an online tool. GAO continues to believe just the opposite, that a well-designed comprehensive online tool could be very helpful, especially for small employers. In FY 17, Labor reiterated its opinions from previous years.
    Recommendation: To ease the burden on plan sponsors, enhance compliance, and help ensure that disclosures to participants are written in a manner that can be understood by the average participant, Labor, IRS, and PBGC should work together to create and regularly update a comprehensive online tool for plan sponsors to search for the reports and disclosures they are required to provide based on plan type, design, and circumstances.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials initially noted that they are continuing their efforts to ensure that plan sponsors have access to comprehensive and up-to-date online resources. They said they had met with Labor and PBGC officials to discuss the value and feasibility of developing and maintaining a comprehensive online tool. However, with decreased resources, they believe it is unlikely for the agency to create and regularly update such a tool. However, they would continue to confer with Labor and PBGC colleagues to determine if it is possible to cross-reference existing agency resources online. As of September 2017, IRS has not provided an update on its efforts. GAO continues to believe that such a tool would be beneficial to plan sponsors of all sizes.
    Recommendation: To ease the burden on plan sponsors, enhance compliance, and help ensure that disclosures to participants are written in a manner that can be understood by the average participant, Labor, IRS, and PBGC should work together to define criteria for complying with the readability provisions in ERISA and the Internal Revenue Code (IRC), and apply the criteria to agency-generated model notices as well as those developed by plan sponsors. As part of these criteria, consider requiring clear, simple, brief highlights at the beginning of disclosures, reflecting federal plain language guidelines.

    Agency: Department of Labor
    Status: Open

    Comments: Labor officials stated that, while sensitive to plan sponsor concerns regarding liabilities that may result from ambiguities that arise when complex information is summarized using plain English criteria, they will, nevertheless, explore the application of readability standards in this context. Officials indicated they may decide it would be helpful to engage a contractor and undertake a survey or other data collection in order to evaluate this recommendation, but do not have resources budgeted in FY 2014 for such an exercise. In the meantime, they plan to continue to use modern communication techniques (such as focus group testing) to improve the effectiveness of their model notices and other standardized disclosures. In 2015, Labor reported that they need to explore the application of readability standards in light of concerns about liabilities that may result from ambiguities when complex information is summarized or presented using "plain English" criteria. Contracting for data collection would help them make an informed evaluation of this recommendation but they do not have the budgeted resources and believe it would not be appropriate to adjust priorities or reallocate resources. They will use techniques such as focus group testing to improve the effectiveness model notices and other standardized disclosures. GAO continues to believe it is important to implement a requirement to have clear, simple, brief highlights. In FY 17, Labor noted that the agency had not yet made a decision regarding future rulemaking and had suggested that the ERISA advisory counsel look at the effectiveness of disclosures.
    Recommendation: To ease the burden on plan sponsors, enhance compliance, and help ensure that disclosures to participants are written in a manner that can be understood by the average participant, Labor, IRS, and PBGC should work together to define criteria for complying with the readability provisions in ERISA and the Internal Revenue Code (IRC), and apply the criteria to agency-generated model notices as well as those developed by plan sponsors. As part of these criteria, consider requiring clear, simple, brief highlights at the beginning of disclosures, reflecting federal plain language guidelines.

    Agency: Department of the Treasury: Internal Revenue Service
    Status: Open

    Comments: IRS officials said that they are committed to using the Federal Plain Language Guidelines as a resource in preparing model disclosures and that they will consider including brief highlights at the beginning of model disclosures. They said that it is unclear that imposing defined readability criteria on employer and plan communications is in the best interests of plan participants, administrators, sponsors, and the retirement system as a whole. However, they do see merit in directing employers and plan sponsors to the Guidelines as a resource for developing readable notices and disclosures, and are considering how best to communicate that resource to stakeholders. As of September 2017, IRS has not provided an update on these efforts.
    Recommendation: To better ensure plan participants have access to information about their rights and benefits, as currently in force under their plans, Labor should direct plan sponsors to post to any intranet website maintained by the employer, as soon as determined feasible by Labor, a copy of the most current summary plan description (SPD) and any summary of material modifications issued subsequent to that SPD.

    Agency: Department of Labor
    Status: Open

    Comments: Labor officials said that they generally support implementing such a requirement, subject to a legal determination of their authority absent legislation to issue such a directive. However, rather than addressing the recommendation as a stand-alone item, they believe it would be better to consider the benefits of such an intranet posting requirement in connection with efforts to expand or modify disclosure standards in response to their 2011 Request for Information (RFI) regarding electronic disclosure. Moreover, officials noted that, during FY 2014, Labor was focusing its regulatory resources on other higher priority projects and did not have a specific timeline for any next action on e-disclosure issues. In their 2015 response, Labor reiterated their agreement from agency comments. Based on comments from their RFI, they understand that many plan sponsors, especially those that have intranet websites, already post plan-related information for employees and that input from consumer advocates that have expressed concern about replacing employees? paper disclosure rights under ERISA with internet access. Labor has not added an e-disclosure project to its regulatory agenda but is still focusing its regulatory resources on other higher priority projects. GAO continues to believe that this is an important pursuit. In FY 17, Labor stated that they do not have any specific timeline for actions on e-disclosures.
    Director: Jeszeck, Charles A
    Phone: (202) 512-7215

    2 open recommendations
    Recommendation: The Secretary of Labor and the Secretary of the Treasury should consider requiring pension plan sponsors to provide participants with an opportunity to opt out of all forms of electronic delivery, including (but not limited to) disclosures sent by default electronic delivery and disclosures posted on a secure continuous access website.

    Agency: Department of Labor
    Status: Open

    Comments: In 2013, DOL stated that it was appropriate to consider the merits of broader rights to opt out of electronic delivery and would want to consult with the Treasury Department/IRS on the agencies' different opt-out standards. In FY14, the agency reiterated that dfferent opt-out standards may be appropriate for general plan information versus individual account or other personal information and would consult with Treasury/IRS. They will consider this matter as part of any future rulemaking that modifies or amends the current regulatory safe harbor. In FY15, Labor stated that different opt-out standards may be appropriate for general plan information versus individual account or other personal information, but that was an issue for Labor to consider in consultation with the Treasury Department/IRS should Labor pursue future rulemaking that modifies or amends the current regulatory safe harbor. In July 2016, DOL confirmed that the agency continues to plan to take the above action. As of July 2017, DOL indicated that no decisions had been made concerning future rulemaking in this area.
    Recommendation: The Secretary of Labor and the Secretary of the Treasury should consider requiring pension plan sponsors to send a periodic paper notice to participants reminding them of their right to change their preferred delivery method at any time and the steps they must take to make these changes.

    Agency: Department of Labor
    Status: Open

    Comments: In FY13, DOL stated that it was appropriate to obtain further input on requiring some periodic paper reminder notice. In FY14, the agency reported that the sort of periodic notice described by GAO could be a safeguard against malfunctions in the electronic communication system and act as a reminder that important plan information is being provided through electronic media. DOL will consider and obtain further input on requiring a periodic paper reminder of as part of any future rulemaking that modifies or amends the current regulatory safe harbor. In FY15, Labor stated that the agency intends to consider and obtain further input on requiring a periodic paper reminder should we pursue future rulemaking that modifies or amends the current regulatory safe harbor. In July 2016, DOL confirmed that the agency continues to plan to take the above action. As of July 2017, DOL indicated that no decisions had been made concerning future rulemaking in this area.