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entitled 'Pension And Welfare Benefits Administration: Opportunities 
Exist for Improving Management of the Enforcement Program' which was 
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United States General Accounting Office: 
GAO: 

Report to Congressional Committees: 

March 2002: 

Pension And Welfare Benefits Administration: 

Opportunities Exist for Improving Management of the Enforcement 
Program: 

GAO-02-232: 

Contents: 

Letter: 

Results in Brief: 

Background: 

PWBA Uses a Multifaceted Enforcement Strategy: 

Weaknesses Identified in Management of Key Areas of Enforcement 
Program: 

Conclusions: 

Recommendations for Executive Action: 

PWBA's Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: PWBA Organization Chart: 

Appendix III: Comments from the Pension and Welfare Benefits 
Administration: 

GAO Comments: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Table: 

Table 1: PWBA's Enforcement-Related Performance Measures for Fiscal 
Year 2002: 

Figures: 

Figure 1: Employee Benefit Plan Universe under PWBA's Jurisdiction, 
1995 to 1998: 

Figure 2: Number of Plan Participants under PWBA's Jurisdiction, 1995 
to 1998: 

Figure 3: Total Value of Assets Reported by Pension and Welfare Plans 
under PWBA's Jurisdiction, 1995 to 1998: 

Figure 4: PWBA's Annual Appropriations, Fiscal Years 1994 to 2001: 

Figure 5: PWBA's Full-Time Equivalent Staffing, Fiscal Years 1994 to 
2001: 
Figure 6: PWBA's 10 Regional and 5 District Offices: 

Figure 7: Overview of PWBA's Investigative Process: 

Figure 8: U.S. Department of Labor, Pension and Welfare Benefits 
Administration: 

Abbreviations: 

EDS: ERISA Data System: 

EFAST: ERISA Filing Acceptance System: 

ERISA: Employee Retirement Income Security Act of 1974: 

IRS: Internal Revenue Service: 

OPPEM: Office of Program Planning, Evaluation, and Management: 

PBGC: Pension Benefit Guaranty Corporation: 

PWBA: Pension and Welfare Benefits Administration: 

VFC: Voluntary Fiduciary Correction: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

March 15, 2002: 

The Honorable Edward M. Kennedy: 
Chairman: 
The Honorable Judd Gregg: 
Ranking Minority Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable John A. Boehner: 
Chairman: 
The Honorable George Miller: 
Ranking Minority Member: 
Committee on Education and the Workforce: 
House of Representatives: 

The Department of Labor's Pension and Welfare Benefits Administration 
(PWBA) works to safeguard the economic interests of more than 150 
million people in an estimated 6 million employee benefit plans—
pension, health, and other plans with assets in excess of $5 trillion 
protected under the Employee Retirement Income Security Act of 1974 
(ERISA). Safeguarding participants' interests in employee benefit 
plans is especially important to their health while working and their 
income in retirement. PWBA plays a primary role in ensuring that 
employee benefit plans operate in the interests of plan participants, 
and the effective management of its enforcement program is pivotal to 
ensuring the economic security of workers and retirees. 

This report, prepared at our own initiative, discusses management 
issues associated with PWBA's enforcement of ERISA. We last reviewed 
PWBA's enforcement program in 1994[Footnote 1] and concluded that PWBA 
needed to take steps to strengthen its enforcement program, including 
evaluating its resource allocation methods and main case selection 
processes. Our current review focused on assessing the progress PWBA 
has made in its efforts to improve its enforcement program so that it 
is effectively enforcing compliance with ERISA's employee benefit plan 
provisions. Specifically, our report discusses (1) PWBA's current 
strategy for enforcing ERISA's employee benefit plan provisions and 
(2) the areas in which PWBA could improve the management of its 
enforcement program. 

To perform our work, we conducted over 100 in-depth interviews with 
staff and management in PWBA's headquarters and 5 of PWBA's 10 
regional offices. We also conducted a nationwide e-mail survey of 
PWBA's investigative staff and their immediate supervisors. In 
addition, we reviewed internal PWBA guidance and documentation, agency 
performance plans and reports, and performance data relevant to PWBA's 
enforcement activities. Moreover, we interviewed key officials at 
other federal agencies with enforcement responsibilities regarding 
potential best practices and key individuals representing private 
organizations in the employee benefit plan, retired persons, and labor 
communities. We conducted our work between November 2000 and November 
2001 in accordance with generally accepted government auditing 
standards. For further detail on our scope and methodology, see 
appendix I. 

Results in Brief: 

PWBA's current strategy for enforcing ERISA's employee benefit plan 
provisions is a multifaceted approach of plan investigations 
supplemented by public education and a new voluntary correction 
program that are carried out mainly through its regional offices. 
Through its plan investigations, PWBA seeks not only to detect and 
correct violations, but also to have a deterrent presence that will 
prevent future violations. The Office of Enforcement prescribes the 
areas of focus for a portion of the regions' investigations to address 
issues of nationwide concern. Regional offices are then provided 
considerable flexibility in implementing PWBA's enforcement strategy 
by focusing the majority of their investigations on local issues. To 
complement its investigative activities, PWBA and its regional offices 
conduct outreach programs to inform plan sponsors, participants, and 
beneficiaries of their rights and responsibilities under ERISA and 
related employee benefit statutes. PWBA also publicly releases the 
results of its civil and criminal litigation against plans with 
violations to serve as a deterrent against future violations. To 
further enhance compliance, PWBA also recently established a Voluntary 
Fiduciary Correction (VFC) program, which allows plan sponsors to 
correct certain types of violations without penalty. 

While PWBA has taken actions to strengthen its enforcement activities 
since our last review in 1994, in our current review we identified 
areas in which PWBA could further improve its enforcement program. In 
particular, we identified weaknesses in PWBA's management of its 
enforcement strategy and investigative process, in its overall human 
capital management, and in its measures for addressing program 
performance. Specifically, weaknesses exist in the Office of 
Enforcement's program oversight and coordination in several key areas 
of its enforcement program. For example, PWBA has not gathered and 
analyzed information on the nature and extent of noncompliance. Lack 
of such data could undermine its enforcement strategy and operations. 
Although PWBA has taken steps to modernize its technology, most 
investigative staff still do not have sufficient and timely access to 
automated information for researching and selecting plans for 
investigation. Furthermore, PWBA lacks a centrally coordinated quality 
review process to ensure that investigations are conducted in 
accordance with accepted investigative quality standards. With regard 
to human capital management, PWBA has given limited attention to 
addressing key issues, including succession planning and workforce 
retention despite significant anticipated future workforce and 
workload changes. Considering that more than half of PWBA's senior 
management staff will be eligible to retire in the next 5 years, this 
situation could undermine the continuity and effectiveness of its 
enforcement program. Finally, we also found that PWBA's performance 
measures focus primarily on program outputs, such as the number of 
specific investigations conducted, rather than PWBA's impact on 
improving plans' overall compliance with ERISA. 

The operational weaknesses and broader management issues that we 
identified in PWBA's enforcement program could affect its ability to 
effectively and efficiently carry out its responsibilities for 
enforcing ERISA's employee benefit plan provisions. Accordingly, we 
are making several recommendations intended to strengthen the Office 
of Enforcement's oversight and to enhance PWBA's ability to deploy its 
resources and better monitor the effectiveness of its operations. In 
its response to our draft report, PWBA acknowledged the need for more 
effective oversight and quality controls, and that there is a need to 
address the internal management issues we raised. PWBA also provided 
additional information on planned and current initiatives that they 
believe address a number of our recommendations. We made revisions to 
our draft report as appropriate. 

Background: 

The Congress passed ERISA to address public concerns over the 
mismanagement and abuse of private sector employee benefit plans by 
some plan sponsors and administrators. ERISA is designed to protect 
the rights and interests of participants and beneficiaries of employee 
benefit plans and outlines the responsibilities of the employers and 
administrators who sponsor and manage these plans. 

Three agencies share responsibility for enforcing the provisions of 
ERISA: the Department of Labor's PWBA, the Department of the 
Treasury's Internal Revenue Service (IRS), and the Pension Benefit 
Guaranty Corporation (PBGC). PWBA enforces ERISA's fiduciary standards 
for plan fiduciaries of privately sponsored employee benefit plans to 
ensure that plans are operated in the interests of plan participants, 
that reporting and disclosure requirements covering the type and 
extent of information given to the federal government and plan 
participants are met, and that specific transactions prohibited by 
ERISA are not used by plans. Under Title I of ERISA, PWBA conducts 
investigations of plans and seeks appropriate remedies to correct 
violations of the law, including litigation when necessary. The IRS 
enforces Title II of ERISA and provisions that must be met which give 
plans tax-qualified status,[Footnote 2] including participation, 
vesting, and funding requirements.[Footnote 3] The IRS also audits 
plans to ensure compliance and can levy tax penalties or revoke the 
tax-qualified status of a plan, as appropriate. The PBGC, under Title 
IV of ERISA in contrast, provides an insurance safety net for the 
participants and beneficiaries of defined benefit pension plans. 
[Footnote 4] To do so, PBGC collects premiums from plan sponsors and 
then administers payment of pension benefits for terminated 
insufficient plans. 

Over the last several years, the number of plans, participants, and 
assets within PWBA's enforcement jurisdiction have increased (see 
figures 1, 2, and 3). PWBA's enforcement program includes a wide 
variety of pension and welfare plan sizes and types.[Footnote 5] The 
majority of pension plans under PWBA's jurisdiction are small plans 
that serve fewer than 100 participants. However, the majority of 
pension plan participants under PWBA's jurisdiction are in a 
relatively small number of large plans that each serve thousands of 
participants. Moreover, since the passage of ERISA in 1974, the types 
of employee benefit plans and the financial transactions for which 
PWBA must enforce ERISA provisions have become increasingly complex, 
giving the agency additional enforcement responsibilities.[Footnote 6] 

Figure 1: Employee Benefit Plan Universe under PWBA's Jurisdiction, 
1995 to 1998: 

[Refer to PDF for image: multiple line graph] 

The graph depicts the number of Pension Plans and Welfare Plans for 
the plan years of 1995 through 1998. 

Note: Data for 1999-2001 are not yet available. Figure excludes 
insured and unfunded welfare plans with fewer than 100 participants, 
which are exempt from federal filing requirements, but for which PWBA 
has enforcement responsibility. 

Source: PWBA. 

[End of figure] 

Figure 2: Number of Plan Participants under PWBA's Jurisdiction, 1995 
to 1998: 

[Refer to PDF for image: multiple line graph] 

The graph depicts the number of Plan Participants covered by Welfare 
Plans and covered by Pension Plans for the plan years of 1995 through 
1998. 

Note: Data for 1999-2001 are not yet available. Figure excludes 
insured and unfunded welfare plans with less than 100 participants, 
which are exempt from federal filing requirements, but for which PWBA 
has enforcement responsibility. 

Source: PWBA. 

[End of figure] 

Figure 3: Total Value of Assets Reported by Pension and Welfare Plans 
under PWBA's Jurisdiction, 1995 to 1998: 

[Refer to PDF for image: stacked vertical bar graph] 

Plan year: 1995; 
Total value of Welfare and Pension Plans: $2,797,961,000. 

Plan year: 1996; 
Total value of Welfare and Pension Plans: $3,216,869,000. 

Plan year: 1997; 
Total value of Welfare and Pension Plans: $3,651,405,000. 

Plan year: 1998; 
Total value of Welfare and Pension Plans: $4,589,900,000. 

Note: Data for 1999-2001 are not yet available. Figure excludes 
insured and unfunded welfare plans with less than 100 participants, 
which are exempt from federal filing requirements, but for which PWBA 
has enforcement responsibility. 

Source: PWBA. 

[End of figure] 

PWBA's annual appropriations have risen in recent years, from $64 
million in fiscal year 1994 to $108 million fiscal year 2001 (see 
figure 4). PWBA earmarks its budget for three broad functions: (1) 
enforcement and compliance activities, which include conducting 
investigations of potential ERISA violations as well as reviews of 
plans' compliance with fiduciary, reporting, and disclosure standards; 
(2) policy, regulation, and public service activities, which include 
policy development and educational outreach programs; and (3) the 
agency's program oversight activities, which include providing 
internal administrative guidance. The enforcement and compliance 
activities are the main focus of PWBA's operations and account for $84 
million or more than 75 percent of its budget in fiscal year 2001. 

Figure 4: PWBA's Annual Appropriations, Fiscal Years 1994 to 2001: 

[Refer to PDF for image: line graph] 

The graph depicts PWBA's Annual Appropriations, in millions of 
dollars, for fiscal years 1994 through 2001. 

Source: Budget of the United States Government, fiscal years 1994 to 
2001. 

[End of figure] 

To accomplish its functions, PWBA relies on a relatively small but 
highly skilled and specialized staff.[Footnote 7] Full-time equivalent 
(FIT) staff levels at PWBA have risen from 575 in fiscal year 1994 to 
850 in fiscal year 2001 (see figure 5). 

Figure 5: PWBA's Full-Time Equivalent Staffing, Fiscal Years 1994 to 
2001: 

[Refer to PDF for image: line graph] 

The graph depicts PWBA's Full-Time Equivalent Staffing for fiscal 
years 1994 through 2001. 

Source: Budget of the United States Government, fiscal years 1994 to 
2001. 

[End of figure] 

Over the years, PWBA has allocated the majority of its FIT increases 
to its enforcement and compliance function. Currently, the enforcement 
and compliance staff represent 80 percent of total PWBA staffing and 
most work in PWBA's 10 regional and 5 district offices (see figure 6). 

Figure 6: PWBA's 10 Regional and 5 District Offices: 

[Refer to PDF for image: illustrated U.S. map] 

Regional Offices: 
Atlanta, Georgia; 
Boston, Massachusetts; 
Chicago, Illinois; 
Cincinnati, Ohio; 
Dallas, Texas; 
Kansas City, Missouri; 
Los Angeles, California; 
New York, New York; 
Philadelphia, Pennsylvania; 
San Francisco, California. 

District Offices: 
Detroit, Michigan; 
Miami, Florida; 
St. Louis, Missouri; 
Seattle, Washington; 
Washington, DC. 

Source: PWBA. 

[End of figure] 

PWBA Uses a Multifaceted Enforcement Strategy: 

PWBA's enforcement strategy is a multifaceted approach of targeted 
plan investigations supplemented by providing education to plan 
participants and plan sponsors and a new voluntary correction program 
for plan officials that are carried out mainly by its regional 
offices. PWBA allows its regions the flexibility to tailor their 
investigations to address the unique issues in their regions, within a 
framework established by PWBA's Office of Enforcement. The regional 
offices then have a significant degree of autonomy in developing and 
carrying out investigations using a mixture of approaches and 
techniques they deem most appropriate. Investigations range from 
responding to participant and others' concerns to developing large-
scale projects targeted at a specific industry, plan type, or type of 
violation. To supplement their investigations, the regions conduct 
outreach activities to educate both plan participants and sponsors. 
The purpose of these efforts is to gain participants' help in 
identifying potential violations and sponsors' help in properly 
managing their plans and avoiding violations. The regions also process 
applications for the new Voluntary Fiduciary Correction program 
through which plan officials can voluntarily report and correct some 
violations without penalty. 

PWBA Enforces ERISA Primarily Through Targeted Investigations: 

PWBA attempts to maximize the effectiveness of its enforcement efforts 
to detect and correct ERISA violations by targeting specific cases for 
review. In doing so, the Office of Enforcement provides assistance to 
the regional offices in the form of broad program policy guidance, 
program oversight, and technical support. The regional offices then 
focus their investigative workloads to address the needs specific to 
their region. Investigative staff also have some responsibility for 
selecting cases. 

The Office of Enforcement identifies "national priorities"—areas 
critical to the well being of employee benefit plan participants and 
beneficiaries nationwide—in which all regions must target a portion of 
their investigative efforts. Currently, PWBA's national priorities 
involve investigating plan service providers,[Footnote 8] health 
benefit issues, and defined contribution pension plans.[Footnote 9] 
Officials in the Office of Enforcement said that national priorities 
are periodically re-evaluated and are changed to reflect trends in the 
area of pensions and other benefits. For example, health benefit 
issues have recently risen in importance due to significant changes in 
health care delivery methods, the aging of the population, and PWBA's 
expanded role in enforcing health plan standards under recent 
legislation aimed at making health care coverage more portable and 
secure for employees. Likewise, PWBA has placed an increasing emphasis 
on defined contribution pension plans, which have become a rapidly 
growing segment of the pension plan universe, because these plans are 
not guaranteed by PBGC and the risk of loss in these plans falls 
entirely on the individual plan participants. According to Office of 
Enforcement officials, the national priorities are also used to help 
leverage PWBA's investigative staff. For example, the emphasis on 
investigating plan service providers recognizes that an abusive 
practice of one service provider could affect a multitude of 
individual benefit plans and participants. On the basis of its 
national investigative priorities, the Office of Enforcement has 
established a number of national projects. For fiscal year 2001, there 
were six national projects pertaining to a variety of issues, 
including the timely crediting of employee contributions to defined 
contribution plans and the compliance of health plans with recent 
legislative changes. 

The regional offices determine the focus of their investigative 
workloads based on their evaluation of the employee benefit plans in 
their jurisdiction and guidance from the Office of Enforcement. For 
example, each region is expected to conduct investigations that cover 
their entire geographic jurisdiction and attain a balance among the 
different types and sizes of plans investigated. In addition, each 
regional office is expected to dedicate some percentage of its staff 
resources to national and regional projects—those developed within 
their own region that focus on local concerns. In developing regional 
projects, each regional office uses its knowledge of the unique 
activities and types of plans in its jurisdiction. For example, a 
region that has a heavy banking industry concentration may develop a 
project aimed at a particular type of transaction commonly performed 
by banks. Currently, regional offices spend an average of about 40 
percent of their investigative time conducting investigations in 
support of national projects and almost 25 percentage of their 
investigative time on regional projects. 

In addition to working cases from the national and regional projects, 
investigative staff are responsible for identifying a portion of their 
cases on their own to complete their workloads and address other 
potentially vulnerable areas. Investigative staff in regions we 
visited told us that these individualized cases often originate from 
news articles or other publications on a particular industry or 
company as well as tips from colleagues in other enforcement agencies. 
Investigative staff and supervisors who responded to our survey 
indicated that leads from plan participants who call or write to the 
regions' benefit advisers for assistance are a major resource in 
targeting cases. The benefit advisers identify situations, including 
those where a participant's concerns may be indicative of broader 
violations, and refer these cases to the investigative staff. 

PWBA's investigative process generally follows a pattern of selecting, 
developing, resolving, and reviewing cases (see figure 7). In fiscal 
year 2001, PWBA expected to complete 6,954 investigations resulting 
from its enforcement activities!' Of these, 2,065 investigations—about 
30 percent—were expected to be closed with results, such as plan 
assets being restored or protected. According to PWBA, its primary 
goal in resolving a case is to ensure that a plan's assets, and 
therefore its participants and beneficiaries, are protected. PWBA's 
decision to litigate a case is made jointly with the Department of 
Labor's Regional Solicitors' Offices. Although PWBA settles most cases 
without going to court, both the agency and the Solicitor's Office 
recognize the need to litigate some cases for their deterrent effect 
on other providers. According to PWBA, the decision to litigate is 
based on several factors, including the prospect of obtaining 
meaningful relief as a result of litigation, the nature of the 
violation, and consistency with PWBA's enforcement priorities. 

Figure 7: Overview of PWBA's Investigative Process: 

[Refer to PDF for image: illustration] 

Case Management and Review: 
Management provides ongoing review of cases and workloads. (Level of 
review depends on type and complexity of case.) 

Case Identification and Selection: 
Investigative staff and management identify and target potential cases 
from sources including: 
* national and regional project categories;
* self-initiated research (media stories, bankruptcy actions, etc.);
* participant inquiries; and; 
* computer-aided research of employee benefit plan information. 

Case Development: 
Investigative staff develop case using methods including: 
* obtaining and researching plan documents from plan sponsor and/or 
plan administrator (may involve use of subpoena);
* interviewing plan officials and/or participants;
* analyzing documents and information collected from plan officials, 
plan administrators, and participants;
* developing evidence of violation of employee benefit statutes; and; 
* coordinating investigation with federal, state, and other 
enforcement agencies, where applicable. 

Case Settlement: 

Investigative staff and management pursue correction of violation 
through means including: 
* voluntary resolution, and; 
* filing civil or criminal litigation against plan sponsor or
administrator if violation is not corrected voluntarily. 
A penalty may be levied against the plan sponsor administrator, if 
applicable. 

Quality Assurance Review: 
Regional management periodically reviews sample of completed cases to 
ensure that PWBA's investigative procedures were followed. 

Source: GAO's analysis. 

[End of figure] 

As part of its enforcement program, PWBA also detects and investigates 
criminal violations of ERISA. As a matter of policy, the Office of 
Enforcement requires the regional offices to limit the resources they 
use for criminal investigations to approximately 15 percent, to help 
maintain PWBA's focus on civil violations of ERISA. From fiscal years 
1995 through 2000, criminal investigations resulted in an average of 
47 cases closed with convictions or guilty pleas annually. Part of 
PWBA's enforcement strategy includes routinely publicizing the results 
of its litigation efforts in both the civil and criminal areas, as a 
deterrent factor. 

PWBA Uses Education, Outreach, and a Voluntary Fiduciary Correction 
Program to Supplement Its Investigations: 

To further leverage its enforcement resources to prevent and detect 
violations and promote overall compliance with ERISA, PWBA provides 
education to plan participants and sponsors and now allows the 
voluntary self-correction of certain transactions without penalty. 
PWBA's education program for plan participants aims to increase their 
knowledge of their rights and benefits under ERISA. The agency also 
conducts outreach to plan sponsors and service providers about their 
ongoing fiduciary responsibilities and obligations under ERISA. Also, 
PWBA recently initiated the VFC program to facilitate corrections by 
plan officials who want to come into compliance with ERISA regarding 
their past practices and ensure better compliance in the future. 

PWBA anticipates that educating participants and beneficiaries about 
their benefits, rights, and PWBA's enforcement authority will 
establish an environment in which individuals can help protect their 
own benefits by recognizing potential problems and notifying PWBA when 
issues arise. At the national level, education and outreach efforts 
are directed by PWBA's Office of Participant Assistance and 
Communication (OPAC), which develops, implements, and evaluates 
agencywide participant assistance and outreach programs and provides 
policies and guidance to other PWBA national and regional offices 
involved in outreach activities. PWBA's nationwide education campaigns 
include a retirement savings program, launched in July 1995 and 
expanded after the passage of the Savings Are Vital to Everyone's 
Retirement Act of 1997,[Footnote 11] which we reported on earlier this 
year.[Footnote 12] PWBA started a similar nationwide effort in 1998 
after the passage of health plan legislation to assist participants in 
understanding their medical benefits. Both educational campaigns 
encourage participants to call PWBA with questions and concerns about 
their employee-provided benefits, such as complaints about late 
contributions to their pension plans. Thus, these national outreach 
efforts are aimed at protecting participants and beneficiaries by 
giving them the information and means to protect themselves. 

PWBA's regional offices also assist in implementing national education 
initiatives and conduct their own outreach to address local concerns. 
The regional offices' approximately 90 benefit advisers provide 
written and telephone responses to participants. Benefit advisers and 
investigative staff also speak at conferences and seminars sponsored 
by trade and professional groups and participate in outreach and 
educational efforts in conjunction with other federal or state 
agencies. 

PWBA's efforts to educate plan sponsors and plan service providers aim 
to increase these groups' awareness of their responsibilities and 
rights under ERISA and its supporting regulations and procedures. At 
the national level, several PWBA offices direct specialized outreach 
activities. As with PWBA's participant-directed outreach activities, 
its efforts to educate plan sponsors and service providers also rely 
upon Office of Enforcement staff and the regional offices for 
implementation. For example, these staff make presentations to 
employer groups and service provider organizations about their ERISA 
obligations, and any new requirements under the law, such as reporting 
and disclosure provisions. PWBA staff also attend and make 
presentations at employee benefits seminars and conferences on ERISA. 
Additional outreach activities include developing partnerships with 
professional organizations associated with employee benefits. For 
example, several regional offices plan to work with state accounting 
societies to increase the societies' knowledge of conducting employee 
benefit plan audits. 

To supplement its investigative programs, PWBA is also taking steps to 
promote the self-disclosure and self-correction of possible ERISA 
violations by plan officials through its new VFC program, which went 
into effect on April 14, 2000. The purpose of the VFC program is to 
protect the financial security of workers by encouraging plan 
officials to identify and correct ERISA violations on their own. 
Specifically, the VFC program allows plan officials to identify and 
correct 13 transactions, such as delinquent participant contributions 
to pension plans and improper expenditures of plan funds. Under the 
VFC program, plan officials follow a process whereby they (1) correct 
the violation using PWBA's written guidance; (2) restore any losses or 
profits to the plan; (3) notify participants and beneficiaries of the 
correction; and (4) file a VFC application, which includes evidence of 
the corrected transaction, with the PWBA regional office in whose 
jurisdiction it resides.[Footnote 13] If the regional office 
determines that the plan has met the program's terms, it will issue a 
"no action" letter to the applicant and will not initiate a civil 
investigation of the violation, which could have resulted in a penalty 
being assessed against the plan. 

Weaknesses Identified in Management of Key Areas of Enforcement 
Program: 

PWBA has taken actions to strengthen its enforcement activities since 
our last review; however, we identified areas in which PWBA could make 
further improvements. Agencies need a strategic management process to 
position themselves to meet future challenges. Such a process should 
provide agencies with a framework for planning, implementing, and 
evaluating initiatives needed to accomplish the organization's 
mission. Effective program oversight, human capital management, and 
program performance measures are three of the ingredients of such a 
framework. We identified weaknesses at PWBA in these functions. 
Specifically, weaknesses exist in PWBA's program oversight and 
coordination in several key areas of its enforcement program, 
including estimating the nature and extent of plans' noncompliance 
with ERISA for planning purposes and maintaining a centralized review 
process to help ensure that investigations are conducted in accordance 
with quality standards. With regard to human capital management, PWBA 
has given limited attention to key issues, such as succession planning 
and workforce retention, despite anticipated future workforce and 
workload changes. Additionally, the performance appraisal system for 
investigative staff may undermine effective case selection and the 
quality of investigations. Finally, we found that PWBA's performance 
measures focus primarily on program outputs rather than on PWBA's 
overall impact. 

Weaknesses in Office of Enforcement's Oversight of the Enforcement 
Program	: 

Weaknesses exist in PWBA's current program oversight and coordination 
of the enforcement program by the Office of Enforcement in six key 
areas. Specifically, we found that PWBA: 

* lacks data on the extent of plans' noncompliance with ERISA, 

* lacks a systematic review to improve its selection of cases, 

* provides limited sharing of "best practices" information, 

* has limitations on its use of technology for selecting and 
developing investigations, 

* provides a limited quality review process for closed cases, and, 

* has not achieved the level of expected participation in its 
Voluntary Fiduciary Correction program. 

Because the enforcement strategy is implemented through decentralized 
regional offices, the need for central oversight and coordination is 
critical to ensure that the agency is conducting quality 
investigations that cover the range of potential violations and 
variety of plans within its jurisdiction. In short, the Office of 
Enforcement needs to ensure that it has the people, processes, and 
technology in place to effectively and efficiently carry out the 
enforcement activities. 

Lack of Data on the Extent of Plans' Noncompliance with ERISA May 
Undermine Enforcement Planning Efforts: 

To date, PWBA has not systematically estimated the nature and extent 
of employee benefit plans' noncompliance with ERISA provisions. 
Therefore, PWBA cannot ensure that it is accurately identifying the 
areas in which it needs to focus to most efficiently and effectively 
allocate its limited resources. Furthermore, the lack of reliable data 
on overall plan noncompliance may reduce the effectiveness of PWBA's 
education and outreach programs. For example, if PWBA does not know 
the extent of a certain type of problem, it cannot gear its education 
and outreach to the plan sponsors to help correct and prevent further 
violations. In addition, the lack of such information may prevent PWBA 
from accurately measuring the overall performance of its enforcement 
program. 

In January 2000, PWBA issued a memorandum exploring the feasibility of 
developing a baseline of noncompliance with ERISA for pension plans. 
However, PWBA concluded that such an effort would require PWBA's full 
investigative staff 90 years to fully and accurately complete. PWBA 
proposed estimating the level of noncompliance within the entire 
pension plan population under its enforcement jurisdiction through 
large samples that would allow it to draw conclusions about the plan 
population with a high level of confidence and precision. However, 
PWBA did not consider analyzing the level of noncompliance by using a 
smaller sample size and a lower, but still acceptable, level of 
precision than it originally considered. Nor did PWBA propose 
targeting specific segments of the plan population—i.e., certain plan 
types, such as defined contribution pension plans, or specific 
industry categories, such as manufacturing—to incrementally assess the 
level of noncompliance for these areas. Either of these alternatives 
would likely have required less time and resources. 

Currently, PWBA carries out the strategic planning activities for its 
enforcement program based on previous experiences in dealing with 
violations of ERISA provisions, as well as perceived and reported 
areas of risk. However, strategic planning based on such an approach 
may fall short in identifying and accounting for the level and range 
of violations within PWBA's enforcement jurisdiction. We believe that 
PWBA should consider alternative, potentially less resource intensive, 
methods for assessing the level of plans' noncompliance. Such an 
approach could entail systematic and periodic reviews based on 
representative samples of the entire plan population or by plan type 
or industry sector. For example, PWBA could perform studies similar in 
concept to one issued by the IRS in 1998 that examined a specific 
segment of the pension plan population to identify areas in which 
those plans failed to comply with the Internal Revenue Code. PWBA has 
already taken some actions in this regard. For example, in fiscal year 
1999, PWBA undertook a limited survey of a sample of health plans to 
gauge the level of compliance among these plans, which we discussed in 
a prior report.[Footnote 14] PWBA could build upon this approach to 
cover all of the employee benefit plans under its enforcement 
jurisdiction. Such analyses could be more helpful in identifying areas 
of simple confusion or error on the part of plan providers in 
interpreting ERISA provisions, as well as areas consistently 
vulnerable to fraud and abuse. PWBA could use the information from 
these analyses to enhance its overall enforcement strategy, by 
shifting its resources to areas of greatest need or to specific 
problem areas, as well as enhance its plan provider outreach and 
education efforts. This information would also enable PWBA to develop 
more effective performance measures to better assess its enforcement 
strategy's impact on improving compliance with ERISA. 

Lack of Systematic Review to Improve Its Case Selection Processes: 

PWBA has not routinely analyzed the full range of cases investigated 
in order to determine which sources of cases are most effective in 
terms of detecting and correcting violations. The "sources of cases" 
are the original leads that brought the potential violation to PWBA's 
attention, such as a participant inquiry, a newspaper article, or a 
national or regional project. Such an analysis is critical to assist 
the regional offices in evaluating whether their investigative 
resources are focused in the most effective and efficient areas. 
Officials in the Office of Enforcement and several regional offices we 
visited told us that PWBA faces an overabundance of work and that they 
must manage multiple workload priorities. However, the effectiveness 
of prior sources of cases is a key piece of information that is 
missing from PWBA's current workload priority and resource allocation 
decisions. 

Previously, from fiscal year 1986 through fiscal year 1990, PWBA's 
Office of Policy and Research performed annual sources of cases 
evaluations that the agency says were aimed at ensuring that it was 
focusing its investigative resources on those cases that allowed it to 
maximize its effectiveness. However, the agency discontinued these 
analyses due to staff shortages. In November 2001, however, the Office 
of Enforcement completed another such analysis using data from its 
fiscal year 1999 investigations. The Office of Enforcement plans to 
perform such analyses on an annual basis, but is uncertain whether it 
will have sufficient resources to do so. 

Limited Coordination and Sharing of "Best Practices" Information: 

Our review shows that the Office of Enforcement does not centrally 
coordinate the identification and sharing of best practices 
information among regions regarding case selection and investigative 
techniques. Limited coordination occurs in certain respects, such as 
the Office of Enforcement's provision of audit guides for specific 
national projects and within some regional offices regarding 
investigative techniques. However, the absence of a more formalized 
centrally managed process could lead to missed opportunities to 
increase the effectiveness of PWBA's enforcement efforts and leave the 
agency vulnerable to duplication of effort by its investigative staff. 

Almost half of the investigative staff and their immediate supervisors 
who responded to our survey indicated that best practices information 
is shared within their region, but only on an informal basis. 
Management and some staff in one regional office we visited said that 
such information was not shared because it is considered "proprietary" 
in that it belongs to the individual investigator who developed it. 
These staff believed that the agency's performance appraisal system 
placed investigative staff in competition with each other for pay 
raises and promotions and that sharing an investigator's successful 
methods would negate their advantage over others. Numerous 
investigative staff told us that, at times, the lack of information 
sharing forced them to "reinvent the wheel" with each new 
investigation, which wasted valuable time and staff resources. 
Regarding the sharing of best practices information across regions, 
fewer than half of the respondents to our survey believed this takes 
place. During our regional office visits, some investigative staff 
told us that only limited and informal sharing takes place because of 
competition among the regions. 

Representatives from the Office of Enforcement acknowledged that they 
could do a better job disseminating information among regions and 
sharing best practices. However, they said that PWBA lacked the 
resources to conduct a major effort in this area. Currently, the 
Office of Enforcement disseminates information to the regions through 
annual training seminars conducted to explain policy and regulatory 
changes and quarterly regional managers' meetings. 

Weaknesses in Technology Used for Selecting and Developing 
Investigations: 

We found that weaknesses remain in PWBA's use of technology for 
selecting plans to be investigated as well as its technological 
supports for developing information once a case has been opened. PWBA 
acknowledges that heavy reliance on technology is critical to its 
mission due to the small size of its workforce. In 1994, we reported 
that PWBA had done little to test the effectiveness of the 
computerized targeting runs it was using to select cases for 
investigation. Since then, PWBA has scaled down both the number of 
computerized runs available for staff to use and its reliance on these 
runs as a primary means of selecting cases. Accordingly, only 34 
percent of all respondents to our recent survey indicated that case 
selection via preset computer searches of plan filings[Footnote 15] 
was an effective method to identify cases involving ERISA violations. 
Several investigative staff we interviewed also explained that the 
computerized targeting runs were not very effective because source 
data were too old and the computer system did not allow them to 
customize targeting runs. PWBA recognizes these shortcomings and is 
attempting to improve computer-based targeting for investigative staff 
by developing both a quicker processing system for plan filings—-the 
ERISA Filing Acceptance System (EFAST)-—and a new targeting system-—
the ERISA Data System (EDS). 

According to PWBA officials, EDS will provide investigative staff with 
enhanced targeting and research capabilities over previous PWBA 
systems. For example, staff will have the ability to perform ad hoc or 
customized inquiries to probe certain plan types, transactions, and 
employers in a specific sector directly from their computer. 
Previously, investigative staff were required to send requests for 
these types of inquiries to the Office of Enforcement for processing. 
In addition, EDS will have a selection of preset targeting runs to 
assist in case selection. Enforcement officials also plan to evaluate 
the preset targeting runs formerly available under its predecessor 
systems and, where appropriate, integrate them into EDS. 

Despite PWBA's efforts, the agency may not fully benefit from EDS in 
the near future because of delays in the implementation of EFAST, 
which supplies the underlying data. In August 2000, EFAST began 
preliminary operations, such as document scanning, to process plan 
year 1999 filings. However, due to system development delays, complete 
plan data from that year and subsequent filing years are still not 
available electronically for investigative staff use. According to 
PWBA officials, by the end of fiscal year 2002 the system should be 
operating so that complete filing data are online and accessible to 
investigative staff within 1 year of receipt by PWBA. Meanwhile, 
investigative staff told us they often compensate for the lack of 
internal computer-targeting tools by using public domain databases 
that contain basic information from more recent plan filings for their 
research. Delays in the implementation of the EFAST system may also 
affect IRS enforcement and PBGC regulatory activities, which are 
dependent on EFAST plan filing data. Until EFAST is fully implemented, 
PWBA's ability to provide timely and quality plan filing data remains 
a concern and a potential area for further evaluation. 

Weaknesses also exist in PWBA's provision of external databases to 
investigative staff for collecting and researching information to 
develop cases. According to investigative staff, databases containing 
legal, economic, and corporate demographic information are a useful 
research tool. However, 63 percent of the investigative staff and 83 
percent of the supervisors responding to our survey indicated that 
they do not have adequate or timely access to Internet databases that 
are needed to perform their work. Several investigative staff in the 
regions we visited told us that they used the Internet to gain access 
to a wide range of information sources to develop case leads and 
conduct investigations, such as news stories about economic events and 
activities of major employers in their region. However, according to 
officials in PWBA's Office of Information Management, access to 
several of these databases is limited to a set number of investigative 
staff in each region mainly due to cost. For example, in two regional 
offices we visited staff told us that only select individuals had 
access to key research databases, which meant that all investigative 
staff inquiries were passed through them. According to staff we spoke 
with, this process was both time-consuming and cumbersome. 

Closed Case Review Process May Not Adequately Ensure Work Quality: 

Our review also found that PWBA lacks a centrally coordinated quality 
review process to ensure that its investigations are conducted in 
accordance with its investigative procedures. Government auditing 
standards and GAO internal control principles emphasize the importance 
of having a quality control process to ensure that audits and other 
reviews of government operations are conducted in a manner to help 
improve the performance of those operations. In 1999, the Office of 
Enforcement formally assigned the responsibility for performing 
quality assurance reviews on closed cases to its regional offices. 
However, the Office of Enforcement does not provide procedures or 
guidance for the regions responsible for conducting such reviews. 

We contacted all 10 regions and found that three regions did not have 
a quality review process for examining closed cases while others had 
only a limited process. Management officials at the seven regional 
offices with closed case review programs told us that the results of 
their reviews are used for quality improvement and staff development 
purposes. However, we believe that regional policies and procedures 
for conducting these reviews may limit their utility in assessing the 
quality of investigations. First, auditing and internal control 
standards require that officials performing quality control reviews 
should be organizationally independent of the unit being reviewed but 
this was not the case in the regional offices. A lack of independence 
creates potential biases in case selection and review that could limit 
the value of PWBA's quality assurance efforts. In regions with review 
programs, the associate or deputy regional directors, officials who 
are not fully independent of the work, conduct the quality reviews. In 
one region we found that group supervisors, who are even closer to the 
performance of investigations, select cases to be reviewed, a practice 
performed by associate or deputy regional directors in the six other 
locations. Second, management in regions with review programs noted 
that their closed case reviews were administrative in nature and 
generally focused on whether case procedures and forms had been 
documented. While this type of internal control activity has value, 
PWBA's reviews rarely address the technical merits of cases. We found 
that only one region's review process evaluated substantive technical 
case issues. Third, we found variation in how regions captured and 
reported the results of their reviews. Management officials in five of 
the seven regions with review programs provide written reports 
documenting their findings to the regional director, while officials 
in the sixth and seventh regional offices convey their results orally 
to staff in regional training and verbally to the regional director, 
respectively. The Office of Enforcement does not require the regions 
to report their findings and thus cannot ensure the quality of PWBA's 
investigations nationwide. 

An effective quality control system is important considering that 
PWBA's enforcement resources are already highly leveraged and it will 
face increasing future workload challenges. Thus it is essential that 
PWBA's quality control system ensure the independence of individuals 
responsible for closed case quality reviews. In addition to addressing 
administrative issues, these reviews should focus on substantive 
technical case issues to provide more assurance that established 
policies, procedures, and investigative standards are followed. Such a 
system should also include mechanisms to provide constructive feedback 
to staff and to make any necessary improvements in program policies 
and operations. 

Low Participation in Voluntary Fiduciary Correction Program: 

PWBA has not realized the level of participation in the VFC program 
that it expected at the program's inception. When PWBA announced the 
program, it anticipated that up to 700 plans would apply for and use 
the program within its first year. As of July 2001—approximately 15 
months after the program's inception—PWBA reported that only 37 plans 
had submitted 60 applications for this program. PWBA officials 
acknowledged that the VFC program is a "work in progress," and they 
are optimistic that it will expand and thus contribute to the 
effectiveness of the enforcement program. Specifically, PWBA believes 
that the voluntary correction of violations through the program will 
be less costly than direct intervention and will allow the agency to 
further leverage its limited investigative resources. PWBA officials 
also told us that the number of VFC program applications received 
alone does not fully capture the benefits of this program, because 
some plan sponsors may use the program's guidance to correct possible 
ERISA violations without filing an application with PWBA. While 
employee benefit industry officials cite benefits of the VFC program, 
such as the absence of user fees or penalties, they expressed concern 
that some of the program's current requirements hinder participation. 
For example, the program requires plan officials to notify all plan 
participants of the potential violation and the ensuing correction, a 
step they are not required to follow when they are subject to a 
traditional PWBA investigation. Benefit experts also cited PWBA's 
requirement to refer plans to the IRS for the levying of an excise tax 
on each prohibited transaction corrected as another potential 
barrier.[Footnote 16] Given PWBA's expectations of the VFC program to 
promote overall compliance with ERISA and leverage its enforcement 
resources, we believe that PWBA needs to closely monitor and analyze 
the barriers to participation in the program and the program's effect 
on its enforcement strategy. 

Human Capital Management Has Received Limited Attention: 

Our review showed that PWBA has given limited attention to human 
capital management despite anticipated workforce and enforcement 
workload changes. Although PWBA has developed training and mentoring 
programs for its new staff, it has only begun to consider the larger 
issues of workforce planning, including succession planning and 
workforce retention. This situation could undermine the continuity and 
effectiveness of the enforcement program because more than half of the 
PWBA senior management staff present on September 30, 2000, will be 
eligible to retire in the next 5 years. Finally, our review found that 
PWBA's current performance appraisal system for investigative staff 
may be causing unintended, undesirable behaviors regarding the 
selection and prioritization of cases as well as the sharing of best 
practices. 

Human capital management functions are carried out by the Office of 
Program Planning, Evaluation, and Management (OPPEM). OPPEM has 
recently begun to look into the issues that drive workforce planning, 
but it has not implemented plans to prepare for the retirement of many 
of PWBA's managers or to help ensure the retention of highly qualified 
employees. Similar to the rest of the federal government, PWBA faces 
the possible retirement of many of its employees in the near future, 
especially at the senior management level. This situation could 
compromise PWBA's ability to manage its enforcement program 
efficiently and effectively. By fiscal year 2006, 21 percent of PWBA's 
employees agency wide and 55 percent of PWBA's senior managers will be 
eligible to retire. In addition, PWBA faces recruitment and retention 
problems. The agency ended fiscal year 2000 unable to fill 8 percent 
of its authorized positions, including its national criminal 
coordinator position, which remained unfilled as of the end of 
November 2001. PWBA's attrition rate is also one of the highest within 
the Department of Labor. In fiscal year 2001, PWBA's rate of attrition 
was 9.7 percent compared with Labor's overall rate of 7.6 percent. 

OPPEM officials have acknowledged the importance of addressing 
attrition and future retirement needs. To that end, OPPEM recently 
collected data from regional management on the skill mix needed to 
perform the future work of the agency. OPPEM has not yet implemented 
the steps necessary to facilitate employee retention and the smooth 
succession of senior staff, but anticipates using the collected data 
to develop specific strategies to ensure a skilled workforce in the 
future. In addition, OPPEM has begun to consider potential actions 
within its control to address the upward trend in attrition, including 
the adoption of retention bonuses and pay banding. OPPEM also recently 
developed an exit survey to better understand the reasons why 
employees are leaving the agency. Nevertheless, PWBA still lacks a 
comprehensive human capital plan or strategy that is linked to its 
current and future workforce needs. 

Sound human capital management practices dictate that organizations 
should periodically engage in strategic planning and analyses to 
better position themselves to meet future challenges. Our prior work 
on human capital management planning also suggests that strategies 
should be linked to current and future human capital needs, including 
the size of the workforce; its deployment across the organization; and 
the knowledge, skills, and abilities needed by agencies. Staff 
deployment, both geographically and organizationally, should also 
enhance mission accomplishment and provide for efficient, effective, 
and economical operations.[Footnote 17] 

In addition, PWBA's performance appraisal system may serve as a 
disincentive to conducting quality casework and sharing best practices 
information and, therefore, has the potential to undermine the 
agency's enforcement program. In 1997, PWBA added a dimension to its 
rating system that evaluates investigative staff on the number of 
cases closed during the year. Investigative staff receive a set amount 
of points for closing a case based on the type of case and how it was 
resolved. The rating form used to calculate the points for cases 
closed does not include points for case complexity, number of 
violations found, or number of participants and beneficiaries 
affected. However, supervisors can grant additional discretionary 
points to investigators based on the above factors. Although the point 
minimum is only one dimension in the rating system, we believe that it 
may act as a disincentive in some cases in that staff are not 
motivated to complete a range of investigations that includes plans of 
different sizes and degrees of complexity. During field visits, 
investigative staff and their supervisors expressed concern about the 
point-rating system. In addition, 50 percent of all the investigative 
staff and their immediate supervisors who responded to our survey 
believed the rating system to be ineffective at motivating staff to 
initiate and complete a wide range of investigations. Among 
supervisors responding to our survey, more than one-third noted that 
the rating system is ineffective. Only 21 percent of all survey 
respondents believed the system to be effective. Respondents who 
believed the rating system to be ineffective were generally concerned 
that the current system (1) placed too much emphasis on quantity, 
rather than the quality of work performed; (2) caused investigative 
staff to focus more heavily on less complex plans and to perform more 
investigations of small plans; and (3) placed too much emphasis on 
monetary results. We believe that PWBA could strengthen its rating 
system by better incorporating case complexity into the point scale 
and considering additional measures to account for the overall impact 
of the case on plan participants and beneficiaries. 

PWBA's current rating system for investigative staff also lacks a 
teamwork dimension. As previously noted, enforcement staff engage in 
only limited sharing of best practices both within and across PWBA's 
regions. Our prior work on human capital management has found that 
leading organizations foster cultures in which individual employees 
interact, support, and learn from each other as a means of 
contributing to the high performance of their peers and their 
organization as a whole.[Footnote 18] Thus, PWBA may foster greater 
sharing of best practices among its investigative staff and enhance 
the effectiveness of its overall enforcement program by adding a 
teamwork dimension. 

Finally, we identified a productivity requirement used by one region 
we visited which supplements PWBA's rating system for investigative 
staff and may have implications for case quality. This region requires 
its investigative staff annually to process 30 cases and to refer 2 
cases to Labor's Regional Solicitor for litigation. Investigators we 
spoke with in that region and respondents to our survey indicated that 
this additional requirement sometimes causes them to focus on less 
complex cases rather than those that may take longer to resolve. 
Management in that regional office explained that the "30/2" standard 
was a goal for staff to strive toward and not a requirement. However, 
an internal regional memorandum we obtained indicated that this 
standard is tied to the "timeliness" performance standard in the 
rating system. Officials in the Office of Enforcement told us that 
they were unaware of any additional "unofficial" expectation being 
established in the region. 

Performance Measurement System Provides Limited Assurance of Overall 
Program Effectiveness: 

While PWBA's performance goals and measures have evolved over time, 
several still do not help PWBA assess the impact of its enforcement 
program on improving overall compliance with ERISA. Performance 
measures that are included in agencies' annual performance plans 
should indicate progress towards their goals and should be objective, 
measurable, and quantifiable. PWBA's program performance measures fall 
short of this requirement in that they generally focus on how well it 
is managing and using its resources—such as the number of specific 
investigations conducted—rather than on PWBA's overall impact on 
improving the security of employee benefits. 

The performance measures that PWBA uses to track progress towards 
meeting its enforcement goals have improved since it published its 
first strategic plan in fiscal year 1999. For example, beginning in 
fiscal year 2001, PWBA began to use separate measures for pension and 
welfare plans related to deterring and correcting violations of 
relevant statutes. We had reported that the previously combined 
measures could have masked poor performance in one of these areas and 
hindered PWBA's efforts to monitor and measure two distinct workloads. 
Also since its first strategic plan, PWBA has increased the numeric 
performance target goals for several of its enforcement-related 
workloads, which shows that the agency is attempting to increase 
productivity. For example, from fiscal year 1999 to fiscal year 2002, 
PWBA increased its target for the percentage of civil investigations 
closed with corrected violations from about 16 percent to nearly 36 
percent. In addition, several of PWBA's enforcement-related 
performance measures have a quality component and focus on actual 
results achieved, such as closed investigations where assets or 
participant benefits are restored. These quality-focused measures 
provide a useful framework for management to communicate its 
investigative priorities and may serve as an incentive for supervisors 
and investigative staff to pursue the most productive case leads. 

Despite these changes, room for improvement remains in PWBA's current 
enforcement-related performance measures (see table 1). PWBA continues 
to aggregate performance measures for separate program activities into 
a single overall measure, which makes it difficult to assess 
performance. For example, for closed fiduciary investigations of 
pension and health plans, PWBA aggregates and reports the number of 
cases with four types of results—(1) restored assets, (2) corrected 
prohibited transactions, (3) recovered participant benefits, and (4) 
plan assets protected from mismanagement and risk of future loss is 
reduced. As a result, assessing whether the goal is actually being met 
may be difficult, because success in one of the four elements may 
obscure failure in another.[Footnote 19] 

Table 1: PWBA's Enforcement-Related Performance Measures for Fiscal 
Year 2002: 

Performance measure: Increase by 5 percent per year the number of 
closed civil investigations of employee pension plans where assets are 
restored, prohibited transactions are corrected, participant benefits 
are recovered, or plan assets are protected from mismanagement and 
risk of future loss is reduced; 
Target: 1,993. 

Performance measure: Increase by 5 percent per year the number of 
closed civil investigations of employee health and welfare plans where 
assets are restored, prohibited transactions are corrected, 
participant benefits are recovered, or plan assets are protected from 
mismanagement and risk of future loss is reduced; 
Target: 620. 

Performance measure: Increase by 3 (to 10) the number of closed 
fiduciary investigations where plan assets are protected by filing a 
proof of claim or adversary
complaint in a bankruptcy action; 
Target: 10. 

Performance measure: Increase by 1 percent per year the ratio of 
closed civil cases with corrected violations to total civil cases 
closed; 
Target: 51.83 percent. 

Performance measure: Increase by .25 percent per year the ratio of 
criminal cases referred for prosecution to United States Attorneys or 
to State prosecutors to total criminal cases closed; 
Target: 43.41 percent. 

Performance measure: Increase by 2 percent benefit recoveries for 
individuals achieved through the assistance of Benefit Advisers; 
Target: $67 million. 

Source: PWBA's fiscal year 2002 Revised Final Annual Performance Plan. 

[End of table] 

In addition, some of PWBA's performance measures may not be 
sufficiently defined to help ensure that the agency properly tracks 
its achievements. For example, PWBA's fiscal year 2000 measure to 
track the assistance provided by benefit advisers aims to increase by 
2 percent the amount of their benefit recoveries—the dollar value of 
benefits returned to participants. In its fiscal year 2000 performance 
report, PWBA stated that it met this goal. However, in this assessment 
PWBA also counted benefits protected—the dollar value of benefits 
prevented from being lost, which typically involve health plans. Thus, 
it was unclear whether PWBA met its goal as originally defined. This 
characterization of the goal persists in PWBA's fiscal year 2001 and 
2002 annual performance plans. 

Finally, our review identified the need for additional measures to 
more fully assess the effectiveness of the enforcement program. About 
one-third of all survey respondents indicated that PWBA needed 
additional measures than those currently being used to assess the 
enforcement functions. These survey respondents and investigative 
staff we spoke with in the regions generally noted that PWBA's 
existing measures placed too much emphasis on numbers of 
investigations conducted and monetary recoveries and too little 
emphasis on the number of plan participants and beneficiaries helped 
by PWBA's enforcement program. For example, a relatively simple 
pension plan case could lead to millions of dollars in recoveries but 
help few participants whereas a complex welfare plan case may yield 
little in monetary recoveries but substantially help many 
participants. However, PWBA does not currently have any annual 
performance plan measures that track the number of employee benefit 
plan participants helped by PWBA's enforcement efforts. 

Conclusions: 

PWBA is a relatively small agency facing the daunting challenge of 
safeguarding the economic interests of millions of Americans by 
overseeing the providers of employee benefit plans. Over the years, 
PWBA has taken steps to strengthen its enforcement program and 
leverage its resources. The agency has placed the majority of its 
resources into its enforcement program, decentralized its 
investigative authority to the regions, and made improvements in 
technology. All these actions contributed to what is, overall, a well-
run program. However, we found that PWBA currently provides limited 
national oversight and coordination in key areas that have the 
potential to impede the operations and overall effectiveness of its 
enforcement program over the long term. Thus, it is important that 
PWBA take steps as soon as possible to improve weaknesses in its case 
selection analyses, best practices sharing, and quality assurance 
processes. In the longer term, PWBA needs to readdress whether and how 
it can better assess the level of noncompliance with ERISA and take 
steps to link this assessment with its human capital initiatives and 
resource allocation decisions. The ever-changing complexities of 
employee benefit plans and their financial transactions coupled with 
the imminent retirement of a large portion of PWBA's workforce 
heighten the need for PWBA to act more strategically to ensure that it 
designs the most efficient and effective enforcement program to 
address its workloads. 

Recommendations for Executive Action: 

To improve the agency's management of the enforcement program, we 
recommend that the Secretary of Labor direct the Assistant Secretary 
of Labor, PWBA, to take the following actions: 

Direct the Office of Enforcement to improve its oversight role in key 
areas. 

* Develop 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. 

* Institutionalize and conduct regular reviews of the sources of cases 
that lead to investigations. 

* Coordinate the sharing of "best practices" information among regions 
relating to the optimum and most productive techniques for selecting 
and conducting investigations. 

* Develop a closed case quality review process that ensures the 
independence of reviewers and sufficiently focuses on substantive 
technical case issues. 

* Monitor and analyze the barriers to participation in the Voluntary 
Fiduciary Correction program and explore ways to reduce them. 

Direct the Office of Program Planning, Evaluation, and Management to 
improve PWBA's human capital functions. 

* Conduct 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. 

* Reevaluate the performance rating system for enforcement staff to 
ensure that case complexity and teamwork issues receive sufficient 
emphasis. 

PWBA's Comments and Our Evaluation: 

We provided a draft of this report to PWBA for review and comment. 
PWBA's comments are included in appendix BI, followed by our brief 
response to some inaccuracies in PWBA's January 31, 2002, comment 
letter. PWBA also provided additional technical comments on our draft 
report, which we incorporated where appropriate. In its response to 
our draft report, PWBA acknowledged the need for more effective 
oversight and quality controls, and that there is a need to address 
the internal management issues we raised. PWBA also provided 
additional information on planned and current initiatives that they 
believe address a number of our recommendations. PWBA disagreed with 
one of our observations that its aggregation of performance measures 
for separate program activities into a single overall measure makes it 
difficult to assess performance. Our reply to PWBA follows below. We 
acknowledge PWBA's continuing efforts to improve its ERISA enforcement 
program but believe that implementing our recommendations will further 
strengthen the program. 

In response to our recommendation that PWBA develop a cost-effective 
strategy for assessing the level and type of ERISA noncompliance among 
employee benefit plans, PWBA cited an ongoing project to gauge health 
plans' compliance with ERISA. PWBA noted that upon compiling the 
results of this project, it would gauge the use of such reviews. We 
revised our report to reflect this initiative. We acknowledge PWBA's 
efforts in this area but believe that PWBA could build upon this 
existing work to better assess the level and type of ERISA 
noncompliance for the entire plan universe, including pension and 
welfare plans, under its enforcement jurisdiction. 

Regarding our recommendation that PWBA institutionalize and conduct 
regular reviews of the sources of cases that lead to investigations, 
PWBA responded that it completed a Case Opening and Results Analysis 
1999 Baseline Study in November 2001, and that it will produce similar 
reports in future years. We revised our report to reflect that PWBA 
had completed this analysis. As we noted in our report, PWBA's last 
sources of cases analysis was performed in 1990, and we believe that 
conducting such analyses on a regular, more frequent basis is 
important to evaluating whether PWBA's investigative resources are 
focused in the most effective and efficient areas. We believe that the 
results of these reviews will also help assist PWBA's future workload 
and resource allocation decisions. 

In response to our recommendation that PWBA coordinate the sharing of 
"best practices" information among regions for selecting and 
conducting investigations, PWBA noted that sharing among senior field 
managers does occur and cited various activities in place to foster 
information sharing. However, PWBA agreed to find ways to address the 
problem to the extent that it exists. Our survey results indicate that 
PWBA may need to take actions to foster staff-to-staff information 
sharing. Considering that more than half of the investigative staff 
that responded to our nationwide survey felt that formal sharing 
across regions does not occur, PWBA should take additional steps to 
assess how best practices sharing among regions-—including at the 
staff level—-can be improved. 

In response to our recommendation that PWBA improve its closed-case 
quality review process to ensure reviewer independence and that 
substantive technical issues are addressed, PWBA agreed that a quality 
review program is important. However, PWBA stated that given its 
organizational structure, none of its components are totally 
independent of the enforcement process. PWBA agreed to discuss our 
findings with its Regional Directors and explore possible 
modifications and improvements. PWBA also noted that it has a number 
of processes for reviewing staff work products and case summaries 
during ongoing assignments. We are aware of PWBA's product review 
process as depicted in Figure 7 of our draft report. However, we found 
that only one region's closed-case quality assurance review process 
addressed substantive technical case issues to ensure that established 
policies, procedures, and investigative standards are followed. Given 
the importance of independent and substantive quality assurance 
reviews to ensuring the integrity of its enforcement program, we 
believe that PWBA needs to address the deficiencies noted. 

Regarding our recommendation that PWBA monitor and analyze the 
barriers to participation in the Voluntary Fiduciary Correction (VFC) 
program, PWBA told us that it is assessing potential barriers, 
including the VFC's general notice and excise tax reporting 
requirements. These requirements were noted as potential barriers to 
participation in our draft report. Given PWBA's stated expectations 
for the VFC program—which include allowing PWBA to leverage its 
investigative resources and the correction of violations in a less 
costly manner than via its direct intervention—ongoing attention to 
this program is needed to increase participation over current levels. 

PWBA cited various current and planned activities related to human 
capital management and succession planning in response to our 
recommendation that it conduct a comprehensive review of its future 
human capital needs. However, the activities PWBA cited are primarily 
stand-alone efforts and are not linked to an agency-wide assessment of 
potential changes in PWBA's future workload and workforce. Although 
PWBA's human capital initiatives have value, PWBA still lacks a 
comprehensive human capital plan or strategy that is linked to its 
current and future workforce needs. Human capital management planning 
strategies should be linked to current and future workforce needs, 
including the size of the workforce; its deployment across the 
organization; and the knowledge, skills, and abilities needed by 
staff. PWBA's attention to human capital management is critical, in 
part, because by fiscal year 2006, 21 percent of PWBA's employees' 
agency-wide and 55 percent of PWBA's senior managers will be eligible 
to retire. As we reported, this situation could compromise PWBA's 
ability to manage its enforcement program efficiently and effectively. 

In response to our recommendation that PWBA reevaluate the performance 
rating system for enforcement staff to ensure that case complexity and 
teamwork issues receive sufficient emphasis, PWBA stated that it would 
provide a copy of our report to union officials representing its field 
staff and ask them to assist in determining whether the performance 
standards should be revised. PWBA also reported that for the one 
region we identified as having a productivity requirement that 
supplemented PWBA's rating system for investigative staff, it has 
retracted that requirement. This provision required investigative 
staff annually to process 30 cases and to refer 2 cases to Labor's 
Regional Solicitor for litigation. 

Although we did not make any recommendations on PWBA's annual 
performance plan (APP) goals and measures, PWBA raised various 
concerns about our observations in this area. 

* PWBA disagreed with our assessment that aggregating four separate 
and key measures of results for closed investigations makes it 
difficult to assess performance. PWBA stated that these activities are 
all linked to the desired outcome of secure benefits and that further 
separation of the data was not appropriate or necessary. However, PWBA 
acknowledged that it does internally monitor these component measures 
separately for management purposes. Despite PWBA's position, we 
continue to believe that the aggregation of measures for separate 
program activities into a single overall measure makes it difficult to 
assess performance because success in one of the four elements may 
obscure failure in another. 

* Regarding PWBA's measure to track recoveries by benefit advisers, 
PWBA stated that it modified its fiscal year 2001 performance report 
by adopting the generic term "recovery" for this measure in place of 
"recovered or protected," as previously used. PWBA further stated that 
the term "recovery" in actuality is a function of "benefits restored" 
plus "benefits protected." We still do not believe that PWBA's 
revision sufficiently improves the clarity of this measure. Benefit 
recoveries—lost benefits actually returned to participants—are 
distinct from benefits protected, which include benefits that are 
threatened but not actually lost. 

* Regarding our observation that PWBA does not measure the number of 
employee benefit plan participants helped by its enforcement efforts, 
PWBA replied that emphasizing participant numbers could skew the 
enforcement program strongly in favor of investigating large plans and 
leave many small-and medium-sized plans without sufficient oversight 
Our draft report did not state that PWBA emphasize such measures, but 
rather that PWBA may need additional measures to fully assess the 
effectiveness of its enforcement program. 

We are sending copies of this report to the secretary of labor, the 
assistant secretary of PWBA, and other interested parties. Copies will 
be made available to others upon request. This report is also 
available on GAO's homepage at [hyperlink, http://www.gao.gov]. 

If you have questions concerning this report please contact me at 
(202) 512-7215, or Daniel Bertoni at (202) 512-5988. Other major 
contributors are listed in appendix IV. 

Signed by: 

Barbara D. Bovbjerg: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Scope and Methodology: 

This appendix describes our approach for collecting and analyzing data 
and for interviewing officials to document the management of the 
enforcement program at the Pension and Welfare Benefits Administration 
(PWBA). The objectives of our review were to determine (1) PWBA's 
current strategy for enforcing the Employee Retirement and Income 
Security Act's (ERISA) employee benefit plan provisions and (2) what 
areas PWBA could improve in the management of its enforcement program. 

We conducted our review at PWBA headquarters in Washington, D.C., and 
5 of 10 regional offices: Boston, Massachusetts; Philadelphia,
Pennsylvania; Kansas City, Missouri; Dallas, Texas; and San Francisco, 
California. We selected the regional offices based on the following 
range of criteria: (1) geographic distribution—dispersed across the 
nation; (2) geographic coverage areas—mixture of small, medium, and 
large jurisdictions; (3) industry sectors covered; (4) workload 
levels; (5) performance indicators—mixture of low, medium, and high 
levels of performance results; (6) type of regional projects; (7) 
regional management—long-tenure managers versus managers recently 
reassigned from the national office; and (8) best practices used—
locations known for innovative approaches. We also conducted a 
nationwide survey of PWBA's investigative staff and their immediate 
supervisors. In addition, we reviewed internal guidance and 
documentation, agency performance plans and reports, and performance 
data relevant to PWBA's enforcement activities. We also visited PWBA's 
contractor-run computer facility for the ERISA Filing and Acceptance 
System (EFAST) in Lawrence, Kansas Furthermore, we interviewed key 
officials at other federal agencies with enforcement responsibilities 
regarding potential best practices as well as representatives from the 
nongovernmental employee benefits, retired persons, and labor 
communities. We conducted our work from November 2000 through November 
2001 in accordance with generally accepted government auditing 
standards. 

Identification of PWBA's Current Enforcement Strategy and Areas for 
Improvement: 

We interviewed and surveyed PWBA management and staff, as well as 
reviewed and analyzed relevant documentation from PWBA and the 
Department of Labor's Office of the Inspector General (OIG). To 
identify the current enforcement strategy and identify areas for 
improvement, we reviewed available PWBA policy guidance, internal 
studies, OIG reports, budget documents, performance and workload trend 
data, and other internal documents. 

Interviews with PWBA Managers and Staff: 

To document the management of PWBA's enforcement program, including 
the agency's enforcement strategy and areas for managerial 
improvement, we conducted in-depth interviews with more than 100 PWBA 
employees. These included senior managers at PWBA's headquarter 
offices as well as senior managers, group supervisors, investigative 
staff and auditors, and benefit advisers at each of the five regional 
offices. We gathered the information using structured interview 
guides. In order to provide a degree of consistency across the agency, 
our interview guides included general questions applicable to all 
employees regarding agency procedures and policies, as well as 
specific questions tailored to each individual's particular position 
or area of expertise. 

Survey of Investigative Staff and Supervisors: 

To collect additional data on PWBA's management of its enforcement 
program, we surveyed PWBA's entire investigative staff and their 
immediate supervisors—a total of 375 individuals. Of this number, 267 
(approximately 71 percent) responded to the e-mail survey—representing 
all of PWBA's regional offices nationwide. To help gather accurate, 
unbiased data, survey respondents were assured anonymity. The survey 
questions reflected much of the content of the interview guides 
administered during field visits to headquarters and regional staff. 
Questions were designed to ascertain the effectiveness of various 
aspects of PWBA's management, including written guidance, quality 
assurance, enforcement priority areas, national office evaluations of 
the enforcement program, case targeting, benefit adviser leads, 
technological supports, sharing of "best practices" information, 
training supports, and the rating system. 

Interviews with Representatives from Other Federal Agencies and 
Nongovernmental Organizations: 

In order to place PWBA's management of its enforcement program in 
larger context, we conducted interviews both with key officials from 
other federal agencies having enforcement responsibilities and 
individuals representing private organizations devoted to employee 
benefit and labor issues. We conducted interviews with officials from 
the Securities and Exchange Commission and from the Department of the 
Treasury's Internal Revenue Service to discuss their general 
enforcement strategies and any applicable best practices. We also 
solicited the opinions of experts from various external groups 
representing the pension industry, retired persons, and labor 
organizations—-such as the American Benefits Council, the American 
Society of Pension Actuaries, the American Association for Retired 
Persons, and the American Federation of Labor and Congress of 
Industrial Organizations. 

[End of section] 

Appendix II: PWBA Organization Chart: 

Figure 8: U.S. Department of Labor, Pension and Welfare Benefits 
Administration: 

[Refer to PDF for image: organization chart] 

Top level: 
Office of the Assistant Secretary; 
Deputy Assistant Secretary for Policy; 
Deputy Assistant Secretary for Program Operations. 

Second level: 
Office of Policy & Research; 
Office of Policy & Legislative Analysis; 
Office of Research & Regulatory Analysis.
		
Field Offices: 	
(10 regional offices 5 district offices)			 

Office of Program Planning, Evaluation & Management. 

Third level: 
Office of Enforcement; 
Office of Regulations & Interpretations; 
Office of the Chief Accountant; 
Office of Participant Assistance & Communications; 
Office of Exemption Determinations; 
Office of Information Management; 
Office of Health Plan Standards and Compliance Assistance. 

Source: PWBA. 

[End of figure] 

[End of section] 

Appendix III: Comments from the Pension and Welfare Benefits 
Administration: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix. 


U.S. Department of Labor: 
Assistant Secretary for	Pension and Welfare Benefits: 
Washington, D.C. 20210: 

January 31, 2002: 

Mr. Daniel Bertoni: 
Assistant Director: 
Education, Workforce, and Income Security Issues: 
United States General Accounting Office: 
Washington, DC 20548: 

Dear Mr. Bertoni: 

We have reviewed the General Accounting Office's (GAO) draft report 
entitled "Pension and Welfare Benefits Administration: Opportunities 
Exist for Improving Management of the Enforcement Program" (GAO-02-
232). This letter provides our general comments concerning the draft 
report; we have already provided technical comments directly to you 
and your staff. We appreciate the recognition that actions have been 
taken since GAO's last review in 1994 to strengthen the enforcement 
program and leverage the use of our resources in what you conclude is 
"overall, a well-run program." 

While we acknowledge the need for more effective oversight and quality 
controls, the agency has not been indifferent to these matters, and we 
will describe below some of those efforts. As GAO recommended in 1994, 
the agency has delegated a great deal of independence to the Regional 
Directors. The Regional Directors operate within a policy framework 
established through our Strategic Enforcement Plan and the annual 
program planning process. Since 1994, the Agency and the enforcement 
program have grown considerably, and we agree that there is a need to 
address these internal management issues. At the same time, it is 
important to recognize that much of our success is a result of the 
organizational culture that provides a significant amount of 
discretion to the Regional Directors to manage their staffs and to 
address the enforcement issues most relevant to their respective 
regions. [See comment 1 on page 52] 

It is also worth noting that in addition to expanding in size since 
1994, PWBA's mission has grown with the enactment of HIPAA and three 
other related health care statutes, the passage of the SAVER Act that 
expanded our outreach, education, and participant assistance programs, 
and the transfer of the responsibility from the IRS to PWBA for 
processing the ERISA annual reports (Form 5500s). 

Provided below is information related to activities that have been 
undertaken in the enforcement area and the information technology, 
human capital management, and Government Performance and Results Act 
(GPRA) areas which we believe was not covered in the draft report. 

Recommendation No. 1: Develop a cost-effective strategy for assessing 
the level and type of ERISA noncompliance among employee benefit plans. 

PWBA recently did embark on a statistical study to gauge health plans' 
compliance with the new provisions of Part 7 of ERISA (i.e., H1PAA, 
Mental Health Parity Act, Newborns' and Mothers' Health Protection 
Act, and Women's Health and Cancer Rights Act). After conducting a 
pilot project in FY 2000, covering approximately 200
investigations (not statistically selected), we decided to conduct a 
statistically valid review in this area. This project, entitled the 
Health Disclosure and Claims Issues—Project 2001 (HDCI), required 
extensive planning among PWBA's enforcement, research, and health plan 
compliance staffs. The project involved the referral of data on 
randomly selected group health plans to field offices for compliance 
reviews. PWBA compiled a statistically valid sample of approximately 
400 multiemployer plans from Annual Report filings. A more labor-
intensive task involved identifying by telephone contact over 900 
covered plans from a random pool of over 2,100 single employers. These 
efforts, and ensuring the statistical integrity of the project, 
demanded meticulous record keeping at both the national and field 
office levels as these offices exchanged data on hundreds of entities. 
We have completed the investigative phase of the project and are just 
beginning the analysis of the results of the investigations. The 
Agency looks forward to being able to utilize the results of this 
project to guide our decisions regarding the allocation of the 
Agency's resources in the area of noncompliance by health plans. 

In addition, once we have compiled the results of HDCI—Project 2001, 
we will be able to gauge better the use of such studies. As we begin 
planning later this year for FY 2003, we will give very serious 
consideration to conducting another baseline project within the 
framework of our existing resources and Agency priorities. We intend 
to continue to discuss this issue with the Agency's Regional 
Directors. With PWBA's resource limitations, it is important to ensure 
that any national enforcement initiative be manageable, while 
continuing to uncover misconduct and protect plan participants. 

However, as GAO correctly points out, PWBA's current enforcement 
strategy recognizes its extremely limited investigative resources and 
relies on effective targeting methodologies and the identification of 
at-risk participant populations to leverage those resources most 
efficiently. The data reveal that this strategy is apparently working: 
both the percentage of PWBA cases converted to fiduciary 
investigations and the percentage of investigations resulting in the 
identification of violations have been steadily increasing over the 
past few years. By conducting enforcement projects, both nationally 
and regionally, PWBA identifies segments of the plan universe to 
ensure compliance with ERISA. The 401(k) Fee Project is an example 
where cases were targeted to ascertain the degree of compliance in a 
specific area. The enforcement project was one element of a multi-
component PWBA initiative to address allegations regarding high and 
excessive fees charged to 401(k) plans. Fifty plans were selected for 
inclusion in the project with each region assigned five 
investigations. Forty of the plans identified for inclusion in the 
project were selected because they were plan clients of institutions 
for which allegations of high or undisclosed fees had been made by the 
media or because of similar information obtained by PWBA in other 
investigations. The Form 5500 database was queried to identify the 
plan clients of these service providers through Schedule C of the Form 
5500. This information was analyzed and plans were selected for 
investigation. Investigations of the plans were conducted and 
violations were cited where applicable. Other examples of similar 
initiatives include: 

* The proxy projects were initiated to ensure compliance with ERISA's 
requirements to manage the proxy voting of stock owned by plans 
prudently and in the interest of participants. 

* The employee contributions project ensured the timely payment of 
withheld employee contributions to health and pension plans, in 
particular 401(k)s. 

* PWBA also undertook a systematic review of 401(k) plans to ensure that
fidelity bonds were in place as required to guard against loss through 
fraud or dishonesty. 

* Multiple Employer Welfare Arrangements (MEWAs) have been and 
continue to be a national emphasis because of the agency's experience 
that unscrupulous operators may leave participants with large, unpaid 
claims. 

* More recently, PWBA has identified orphan plans and plans whose 
sponsors are in bankruptcy as national emphases. 

Recommendation No. 2: Institutionalize and conduct regular reviews of 
the sources of cases that lead to investigations. 

In November 2001, PWBA completed the Case Opening and Results Analysis 
(CORA) 1999 Baseline Study to rank the most likely source that would 
best identify a potential violation of ERISA. The agency intends to 
build on the CORA 1999 Baseline Study and will produce CORA reports in 
future fiscal years so that longitudinal studies can be prepared. Work 
has already begun on the CORA 2000 study; currently data verification 
of FY 2000 data is underway, which is the preliminary step before data 
analysis can begin. In addition to analyzing the results based on the 
source of an investigation, PWBA intends to conduct corollary studies 
as part of CORA for management use. 

It was important for PWBA to approach this analysis in a methodical 
manner and with long-term goals in mind. The first step was to 
complete the design, testing, and full implementation of the 
Enforcement Management System (EMS), so that the Agency would have 
reliable data upon which to base its studies. EMS is a significant 
milestone which has expanded the information being collected on 
investigations, empowered investigators and managers at all levels to 
access instantly information on any closed or open investigation, and 
provided flexibility to allow the addition of new data elements as the 
need arises. The system provides standard reports useful to both 
investigators and managers and permits the export of these reports to 
Excel for further analysis and calculations. These reports allow the 
regions to monitor and review specific information as to sources of 
cases, as appropriate. 

Recommendation No. 3: Coordinate the sharing of "best practices" 
information between [sic] regions relating to the optimum and most 
productive techniques for selecting and conducting investigations. 

"Best Practices:" 

With respect to the sharing of "best practices," we note that while 
Office of Enforcement (OE) managers did refer to being able to do a 
better job in the area, that response was given in the context of 
needing additional resources to be able to do so. We believe that we 
have taken a strong, proactive role in coordinating and delivering 
information on "best practices." GAO mentions on page 20 that "... 
fewer than half of the respondents [to the survey] believe [that 
sharing "best practices" across regions] takes place." However, it is 
possible that many field staff are unaware that considerable sharing 
among senior field managers does, in fact, occur on a regular basis; 
we will try to find ways to address the problem to the extent that it 
exists. For example: 

* We routinely review and share with field staff and managers (no less 
often than quarterly) the planned regional enforcement projects for 
the upcoming year and the results/successes achieved. This sharing of 
issues explored, targeting methodologies, and lessons learned is not 
reflected in GAO's report. 

* A specific audit guide to review plans' compliance with Part 7 of 
ERISA was developed and shared in connection with the HDCI—Project 
2001. 

* Other specialized training in the areas of bankruptcy, proxy voting, 
MEWAs, and derivatives were developed by certain regions with OE 
assistance and made available to all other regions. Regions routinely 
share their investigative materials when their regional enforcement 
projects are adopted by another region; for example, the Kansas City 
region provided a senior investigator to conduct hands-on training to 
the Atlanta region when Atlanta adopted the settlor fee project. 
Similarly, Kansas City provided the written materials developed in 
conjunction with the settlor fee project to both the Dallas and New 
York regions. 

* During our annual field office training, we have made presentations 
in every region to field staff on techniques for selecting and 
investigating cases on such varied topics as orphan plans, health 
plans, Employee Stock Ownership Plans (ESOPs), MEWAs, and employee 
contribution cases. 

* Individual OE staff members are assigned responsibility as subject 
matter experts for a wide range of topics, issues, and projects and 
are charged with monitoring field activities and sharing information 
through written guidance memoranda or national teleconferences. 

* We have a program of formal presentations on the topic of "What 
Works and What Doesn't Work" which is given by a Regional Director at 
most of the quarterly Regional Directors' meetings. The Regional 
Director making the presentation provides insight into what has and 
has not been helpful in doing the job. 

* Recently, field offices have been provided with Discoverer software 
that allows them to create their own ad hoc computer targeting 
reports. Field offices were also provided with a methodology for 
numbering these targeting reports. OE will monitor these reports for 
success and share these with the other field offices. 

* The recently issued CORA 1999 Baseline Study established a baseline 
of case-related data to assist enforcement personnel in selecting 
sources of cases with the greatest likelihood of producing results on 
behalf of participants and their families. CORA determined the sources 
of investigations that were the most common reason for opening an 
investigation. OE provided regions with copies of CORA to assist them 
in targeting plans for potential violations of ERISA. 

* The agency has developed and conducts a number of multi-week courses 
attended by all investigative staff in basic ERISA law and 
investigative techniques; auditing techniques for non-accountants; 
reviewing financial institutions servicing plans; and criminal law and 
investigative procedures. 

PWBA National Targeting Committee: 

GAO omitted a description of the PWBA National Targeting Committee, 
which meets annually and is composed of at least one representative 
from each region as well as OE representatives. Committee meetings are 
open forums used to facilitate the exchange of ideas and experiences, 
and committee representatives are expected to carry back to their 
regions any helpful information gleaned from these discussions. 
Committee members share ideas and experiences relating to case 
targeting and develop strategies and methodologies designed to 
maximize the effective use of PWBA resources. The committee prepares a 
written report based upon the information shared in the annual 
targeting committee meeting. These reports are provided to the 
Regional Directors, the Director of Enforcement, and the Deputy 
Assistant Secretary for Program Operations, and are shared at the 
staff level. Included in these reports are descriptions of regional 
projects, targeting reports, and other methodologies used to locate 
plans with potential problems. GAO staff were provided copies of two 
of these reports. 

Technology used to help select plans for investigation: 

GAO concluded that most of the PWBA investigative staff does not have 
sufficient and timely access to automated information for researching 
and selecting plans for investigation. However, each region, at a 
minimum, has the following services available to them: Westlaw; RIA; 
BNA; Lexis-Nexis; and People Finder. The last two services are limited 
to only one person in each office due to licensing costs. The agency 
makes every effort to find the best available Internet sites and 
relies on input from the Solicitor's Office in its selection of web 
sites for conducting legal research. The National Training Coordinator 
also recommends publications that would assist in the conduct of 
investigations. Regions are given annual funding authority to procure 
books, services, and publications as needed. Instances where specific 
software is needed for help in an investigation can usually be 
accommodated within the budgetary resources of the region. 

PWBA will again survey the regional staff to find the names of 
specific sites that investigators find useful during investigations 
and perform a cost-benefit analysis to ascertain the best way to make 
these services available to the staff. Although it may be
ideal to provide each person within the agency a license to a 
particular software or Internet tool, the licenses are expensive and 
there is a significant time commitment to master the use of some of 
the software, such as Discoverer. It is the job of PWBA management to 
establish budget and time priorities. We may need to ensure that staff 
understand more of the management issues involved in these decisions. 

Finally, it should be noted that PWBA has an internal "Intranet" site 
that is used to share a variety of information related to 1) cases 
underway in the Agency (a global search function covers all National 
Office components and the field), 2) technical information on 
conducting Part 7 compliance reviews, 3) the Enforcement Manual, 4) 
the EMS Users Manual, 5) web-based directories, and 6) the ERISA Data 
System (EDS). Plans are underway to place additional materials on the 
Intranet related to specific regional initiatives, enforcement issues, 
administrative guidance, and PWBA advisory opinion letters (combined 
with a search engine). 

ERISA Data System (EDS): 

It should be noted that the ERISA Data System (EDS) has now been 
successfully implemented in all field offices. EDS provides all 
investigators with the ability to probe directly the EFAST data by the 
most commonly used criteria, such as plan types, business sectors, 
certain investments (such as real estate), and other significant 
indicators. Feedback from the field offices regarding EDS has been 
very positive thus far. The 5500 data are made available when received 
from the EFAST contractor (currently on a monthly basis, but will be 
nightly once a software change request has been implemented). We are 
aware of the difficulties caused by the transition to the new EFAST 
system and expect that this technology will pay off once it is fully 
implemented. 

We have also implemented the first phase of EDS targeting using the 
Oracle Discoverer query tool. This tool gives the regions the ability 
to search for plans as well as target plans that fit certain criteria 
designated by the investigator. These users have been provided a 
starting library of 21 targeting workbooks, which can be modified as 
the regions need to adjust them for local conditions. The results can 
be exported to Excel spreadsheets to be made available to all 
investigators. The OE has created a new targeting numbering scheme so 
that the outcomes of the resulting investigations can be better 
tracked. In addition to the preset targeting workbooks, these 
Discoverer users have the ability to create queries based on any data 
element on the Form 5500 plus accompanying schedules. The next EDS 
targeting phase is under development, and we expect implementation in 
the coming months. This phase will make a viewer version of Discoverer 
available to all investigators so that they can all run the preset 
queries and adjust benchmarks and thresholds as they see fit. 

Recommendation No. 4: Develop a closed case quality review process 
that ensures the independence of reviewers and sufficiently focuses on 
substantive technical case issues. 

PWBA agrees that a quality review program is important. As pointed out 
by GAO in its report, the majority of regions conduct an active 
program of quality review on closed cases, although the reviews were 
criticized because of the lack of independence on the part of the 
reviewers and the perceived lack of substantive technical review in 
some instances. While OE has not issued specific written procedures or 
guidance on how offices should conduct these reviews, we have 
discussed other offices' practices and policies at managers' 
conferences and provided written materials describing these programs. 

In the past, we have struggled with this issue and have tried 
different models for conducting accountability reviews—none of which 
fully met the Agency's needs. For example, in 1992-93, we tried a 
pilot review project that covered enforcement and administrative 
operations. That model relied on National Office staff examining a pre-
determined set of cases and selected aspects of the administrative 
part of the office operations. The latter part of the review was well 
received, but there were considerable differences of opinion on the 
accuracy and value of the enforcement review—in large part because 
several of the National Office staff reviewing casework had little or 
no experience in actually conducting investigations. This situation 
still exists today in that many of the OE staff have either worked 
only a short time in the field (on a detail) or have no field 
experience. Also, given the streamlined organizational structure in 
PWBA, there is no component that is totally independent of the 
enforcement process where staff would be knowledgeable enough to 
conduct such reviews. However, we will discuss GAO's findings with the 
Regional Directors and explore possible modifications and improvements 
to the current quality review program. We will provide a more detailed 
response on this matter when we respond to the recommendations in the 
final report. 

We also would like to point out that OE has a number of routine 
processes in place that allow it to provide substantive technical 
oversight, ensuring consistent application of the law and agency 
procedures regarding the voluntary compliance process, litigation, 
penalty assessments, and claiming monetary results. OE receives and 
reviews every work product in each of these categories and, where 
appropriate, discusses discrepancies with specific offices. In fact, 
no monetary recovery submission is approved until it undergoes two 
levels of review in OE to ensure that violations are correctly cited 
with sufficient evidentiary basis and that monetary correction has 
actually occurred as a direct result of field office activities. 

OE also receives and reviews quarterly written case summaries that the 
field offices identify as being the most significant and shares them 
with other components within the national office, such as PBSD, ORI, 
and OED. A group meeting is then held to discuss the issues identified 
for investigation and to offer suggestions to the field office to 
enhance the investigative results. On occasion, it is concluded that 
the issue identified is, in fact, not a problem (possibly because of 
the existence of a complex statutory or class exemption), and the 
field office is so advised. 

V. Monitor and analyze the barriers to participation in Voluntary 
Fiduciary Correction Program and explore ways to reduce them. 

GAO characterizes participation in the Voluntary Fiduciary Correction 
Program (VFCP) as "low" in light of the Agency's original projection 
of 700 that appeared in the context of the VFCP's economic impact 
analysis. It must be noted that this projection was merely a 
mathematical calculation based on very limited experience related to 
the Department's closest analog, the Pension Payback Program (PPP). 
However, the PPP had significant distinctions from the VFCP, including 
a narrower scope, a more limited duration, and excise tax relief 
resulting in approximately 170 plans participating in the six-month 
program. The fact that participation in the VFCP in practice is below 
that estimate, in our view, only goes to the issue of the legitimacy 
of the underlying assumptions made when it was calculated and does not 
necessarily reflect on the quality of the program.[Footnote 1] 

PWBA sought public comment on all aspects of the VFCP, and found that 
the VFCP as originally proposed included provisions that public 
commenters and potential applicants found to be potential 
disincentives to participate, such as a general notice requirement and 
mandatory reporting of prohibited transactions to the IRS for excise 
tax imposition. PWBA has submitted a final VFCP to the Office of 
Management and Budget, and will provide a description of the final 
program to GAO as soon as it is released. 

VI. Conduct 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. 

Human Capital Management: 

PWBA has identified the human resource management challenges it will 
face within the next five years and is taking proactive steps to 
ensure that the right people are in the right place at the right time 
and that the systems are in place to meet these challenges. Set forth 
below is a description of the kinds of activities being undertaken by 
the agency within existing resources: 

* In FY 2001, PWBA's attrition rate dropped to 9.4 percent. We also 
understand that the Departmental attrition rate in FY 2000 was 7.2 
percent and was 6.7 percent in FY 2001. While our attrition rate was 
still higher than the Departmental average in FY 2001, we have made 
considerable improvement in this area. 

* PWBA is currently planning to implement a student loan repayment 
program as one vehicle to attract and retain valuable employees. 
Because the retention problem is more significant in certain field 
offices, the plan is to establish a pilot program. If this program 
proves successful, it may be implemented PWBA-wide. 

* In order to provide National Office Directors and Regional Directors 
additional tools to recruit well-qualified candidates for PWBA major 
occupations, the Deputy Assistant Secretary has re-delegated authority 
to them to approve certain human resource flexibilities. This includes 
the authority to approve advances in pay, superior qualification 
appointments, and payment of travel expenses for interviews. 

* To recruit more effectively well-qualified candidates, PWBA 
established national and field recruitment teams. Each national office 
component and region designated an individual to facilitate 
recruitment for major occupations. Recruitment team members attend a 
variety of job fairs, college campuses, and other events where 
applicants with the necessary skills to do the work of the 
organization are available. Recruitment team members can access a 
group e-mail address to alert other team members about their 
recruitment activities and share information about the best sources of 
candidates. In addition to recruitment teams, PWBA is beginning to 
advertise its vacancies on the Internet. We have begun to utilize 
BenefitsLink.com to advertise senior management and specialized 
positions. Based on our preliminary review of the visits to our 
advertisements, we believe this medium offers a very good recruitment 
source for future job advertisements. 

Succession Planning: 

While PWBA has not instituted a formal succession plan, we have taken 
significant steps to build, sustain, and effectively deploy the 
skilled, knowledgeable, diverse, and high-performing workforce needed 
to meet current and emerging needs. 

* PWBA has made extensive use of the U.S. Office of Personnel 
Management (OPM) supervisory and executive development programs. 
Annually, PWBA sends non-supervisors, supervisors, and other managers 
to OPM's supervisory and executive development programs. Over the 
years, a number of employees who attended the OPM training have moved 
into supervisory and senior management positions with the agency. We 
know from reviewing past results that employees who have attended the 
training programs have progressed to supervisory and managerial 
positions in PWBA. These programs are highly rated by those who 
attend. In FY 2000 and FY 2001, we sent 29 employees and 35 employees, 
respectively, to OPM courses. In FY 2002, 47 employees are scheduled 
to attend at a cost of $148,000 for tuition and room and board. 

* In addition, we have established Deputy Regional Director positions 
in all 10 regions, providing more staff the opportunity to develop the 
expertise needed to manage a regional office. These positions also 
provide the missing "link" in the career ladder in our Field 
positions, since the first-line supervisors don't have the similar 
range of experience in running a multi-faceted program with a sizable 
staff (50-75 employees per office). 

* PWBA conducts an extensive in-house technical training program. In 
FY 2001, PWBA contracted with Job Performance System, Inc., to 
undertake a training needs assessment and make recommendations on how 
PWBA could improve its training program. The agency is currently 
evaluating that assessment and has begun implementing recommendations, 
as appropriate and as resources permit. 

* PWBA provides long-term career development assignments in two 
categories—executive potential and executive leadership. Each program 
lasts approximately one year. Over the past several years, PWBA has 
supported nine employees in these assignments. The executive potential 
program is available to supervisory employees who demonstrate 
executive management potential. Employees selected for this program 
must complete two 60-day rotational assignments outside PWBA. These 
rotational assignments are designed to give the employee exposure to 
the operations of other federal or state agencies. In some cases, the 
employee may work in a private sector organization during one of the 
rotational assignments. The executive leadership program is designed 
primarily for journey-level employees who demonstrate supervisory 
potential. Employees selected for this program conduct research on 
management and work-related issues, prepare group reports, shadow 
supervisory and management officials in their daily work, and complete 
two rotational assignments. 

* PWBA also provides opportunities for short-term career development 
assignments. A few years ago, the Deputy Assistant Secretary for 
Program Operations established a Special Assistant position in his 
immediate office to provide journey-level employees with an 
opportunity to work on projects at the highest level in the agency. 
Since its inception, 14 employees have completed a rotational 
assignment. Of these, five have either been selected for supervisory 
or other management positions on a permanent or acting basis. For FY 
2002, the Deputy Assistant Secretary has selected five Field staff for 
this program. PWBA has also established a similar rotational program 
involving regional offices. The PWBA San Francisco Regional Office is 
the first to participate in this program. 

* The Department of Labor has an SES candidate development program, in 
which PWBA has participated. This program lasts approximately 18 
months and includes rotational assignments inside and outside the 
Department of Labor. A PWBA employee who was selected for the program 
has completed all requirements and is now eligible for a 
noncompetitive appointment to a position in the Senior Executive 
Service. 

Recommendation No. 7: Reevaluate the performance rating system for 
enforcement staff to ensure that case complexity and teamwork issues 
receive sufficient emphasis. 

The current performance rating system for field investigators and 
auditors was designed in partnership with the union that represents 
field bargaining unit employees—the National Council of Field Labor 
Locals (NCFLL). The performance standards reflect a desire to have a 
less subjective performance rating system. In FY 2000, at the request 
of the NCFLL, an analysis of the first performance element was 
undertaken, and as a result the element was modified for the rating 
period beginning April 1, 2001. We will provide a copy of GAO's report 
to NCFLL and ask them to assist us in determining whether the 
performance standards should undergo another joint revision, after the 
conclusion of the current rating cycle.[Footnote 2] It should be noted 
that GAO states that about one-third of survey respondents indicated 
that PWBA needed additional measures than those currently being used 
to assess the enforcement functions. This could be restated to show 
that about two-thirds of survey respondents did not feel that PWBA 
needed additional measures. [See comment 2 on page 52] 

Performance Measurement System Needs Improvements: 

Another conclusion reached by GAO, but not mentioned in terms of a 
specific recommendation for executive action, is that PWBA's 
performance measurement system provides limited assurance of overall 
program effectiveness. In a previous GAO report (GAO-01-779, June 15, 
2001), PWBA agreed with GAO that a single enforcement performance 
goal, as delineated in our FY 1999 and FY 2000 Annual Performance Plans,
failed to be sensitive enough to measure adequately both pension and 
health related enforcement activities. In fact, prior to the issuance 
of that report, PWBA had already taken steps to bifurcate the goal 
into a pension and health enforcement goal to reflect more effectively 
the use of resources. In essence, GAO and PWBA had a mutual interest. 
We disagree, however, that further separation of the data within the 
respective goals is appropriate or necessary. GPRA envisioned 
overarching, outcome-oriented goals. While we continue to strive for 
outcome-oriented goals, it is acceptable to measure outputs that serve 
as surrogates to outcomes and can be reasonably linked to success. We 
believe restoring assets, correcting prohibited transactions, 
recovering participant benefits, and protecting plan assets are all 
linked to providing for the desired outcome of secure benefits. 

While we appreciate that further separating the enforcement goals 
would provide us more
specificity with respect to individual strategies, it would take us 
backwards in the performance measure evolution by measuring activities 
rather than a more outcome-oriented measure that incorporates numerous 
aspects of performance. PWBA considers the data to assess specific 
strategies. We aggregate it for the purpose of reporting broad goals 
while still monitoring the success or failure of individual 
strategies. We believe that the four outputs--restored assets, 
corrected prohibited transactions, recovered participants benefits, 
and plan assets protected are all favorable and indicate our success, 
none of which has greater weight over the other. Therefore, taken 
together and balancing the need for broad strategic objectives, the 
existing goals best serve PWBA's ability to manage towards results 
rather than by activity. 

On pages 29-30, GAO raised questions regarding the performance measure 
used to track recoveries by the Benefit Advisors (whether the goal was 
defined as "benefits recovered" or "benefits restored") and whether 
the FY 2000 goal was met. In fact, PWBA exceeded its goal. In FY 2000, 
we recovered $62 million as a result of Benefit Advisor assistance. To 
address the confusion over the term "benefit recovery," PWBA modified 
its FY 2001 performance report and adopted the generic term "recovery" 
which in actuality is a function of "benefits restored" plus "benefits 
protected." 

PWBA does have a concern about GAO's observation that the agency does 
not currently have any annual performance plan measures that track the 
number of employee benefit plan participants helped by PWBA's 
enforcement efforts. In the 1980s, PWBA's enforcement strategy 
concentrated large amounts of resources on "significant" cases (i.e., 
those that affected the largest number of participants). With the 
passage of time, however, we have learned that more problems exist in 
medium to small size plans--and that they tend to have fewer 
professional advisors or service providers. To emphasize participant 
numbers could inappropriately skew the enforcement program strongly in
favor of investigating large plans, which would leave many of the most 
vulnerable participants without government assistance. Furthermore, if 
there were a numeric goal related to the number of participants 
affected by our investigations, that same goal would have to be placed 
in the performance plans of the field managers, which would bias the
selection of cases for investigation. As a matter of policy, PWBA has 
not used participant numbers but has instead used the number of 
investigations as a measure. 

In conclusion, the Department of Labor appreciates having had the 
opportunity to comment on this draft report. 

Sincerely, 

Signed by: 

Ann L. Combs: 

Footnotes: 

[1] When PWBA announced the program, the Agency stated in the Federal 
Register, "The Department projects that Plan Officials of 
approximately 700 plans will apply for and use the VFC Program .... 
The Department views this estimate as an upper bound; actual 
participation may be somewhat smaller depending on the cost 
effectiveness of correcting the actual transactions involved, the 
complexity of the legal and factual issues involved in
a given transaction, and the degree of similarity between an actual 
transaction and a transaction and correction described by the terms of 
the VFC Program. The Department recognizes that Plan Officials may not 
view the VFC Program as offering a cost effective means of correcting 
all potential violations." Nowhere is it indicated that the 700 
participating plans would apply within the first year. It was always 
assumed that there would be a warm-up period before reaching full 
levels of participation. 

[2] GAO notes that one region appears to have a productivity 
requirement in addition to those set forth in the formal performance 
standards. The Regional Director has agreed to retract formally the 
informal requirement of processing 30 cases and making two referrals 
to the Solicitor's Office via memo to the entire investigative staff. 

GAO Comments: 

1. In its response letter PWBA incorrectly depicted our prior work on 
its enforcement program. PWBA stated, "As GAO recommended in 1994, the 
agency has delegated a great deal of independence to the Regional 
Directors." While our 1994 report, Pension Plans: Stronger Labor ERISA 
Enforcement Should Better Protect Plan Participants, GAO/HEHS-94-157 
(Washington, D.C.: Aug. 8, 1994), contained three recommendations to 
improve Labor's ERISA enforcement program, we did not recommend that 
PWBA delegate independence to its Regional Directors. In the context 
of our 1994 recommendation that PWBA increase the use of penalties 
authorized by ERISA by establishing procedures to routinely review 
referrals of potential violators from the Internal Revenue Service, we 
did state that PWBA use "...decentralized legal staff to help assess 
prohibited transaction penalties when warranted." 

2. In commenting on our assessment of PWBA's performance rating system 
for enforcement staff, PWBA incorrectly linked one of our findings on 
its agency performance plan measures to a discussion of their rating 
system—e.g., that about one third of survey respondents believed PWBA 
needed additional agency performance measures to assess its 
enforcement functions. The example PWBA referred to is not related to 
its performance rating system but to our survey finding that PWBA may 
need additional measures to more fully assess the effectiveness of its 
enforcement program. We based this conclusion on our review and 
analysis of PWBA's measures and our nationwide survey of its 
investigative staff and supervisors. About one-third of those surveyed 
noted that additional measures were needed to assess the enforcement 
functions; about 40 percent felt that current measures were adequate; 
and about 26 percent submitted a "do not know" response. Although one-
third of staff responding is not a majority, this seemed an important 
observation by a significant number of people knowledgeable about 
PWBA's operations. Respondents and investigative regional staff we 
spoke with generally noted that PWBA's measures placed too much 
emphasis on numbers of investigations conducted and monetary 
recoveries and too little emphasis on the number of plan participants 
and beneficiaries helped by PWBA's enforcement program. 

[End of section] 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Barbara Bovbjerg, (202) 512-7215: 
Daniel Bertoni, (202) 512-5988: 
R. Elizabeth 0'Toole, (202) 512-3050: 

Staff Acknowledgments: 

In addition to those named above, Frank F. Putallaz, George A. Scott, 
Aonghas St-Hilaire, Roger J. Thomas, and Anthony J. Wysocki made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] U.S. General Accounting Office, Pension Plans: Stronger Labor 
ERISA Enforcement Should Better Protect Plan Participants, [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-94-157] (Washington, D.C.: Aug. 
8, 1994). 

[2] To achieve tax-qualified status, plans must comply with a number 
of requirements in the Internal Revenue Code governing the provision 
of contributions and benefits. 

[3] ERISA includes minimum standards for how employees become eligible 
to participate in pension plans (participation standards), how 
employees earn a nonforfeitable right to their benefits (vesting 
standards), and how the plans are to be funded (funding provisions). 

[4] Defined benefit plans pay specific retirement benefits, generally 
based on the number of years of service, earnings, or both. The 
sponsoring company is responsible for ensuring that plan assets are 
sufficient to pay benefits under the plan. 

[5] Welfare plans are established and maintained to provide employee 
health benefits, disability benefits, death benefits, prepaid legal 
services, vacation benefits, child care, scholarship funds, 
apprenticeship and training benefits, or other similar benefits. 

[6] PWBA's enforcement responsibilities have increased particularly 
because of legislative changes in the health care area. The 
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which 
provides for the limited continuation of health care coverage for 
employees and their beneficiaries if certain events would otherwise 
result in a reduction of benefits, expanded PWBA's responsibilities 
under ERISA. Recently, the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA), aimed at making health care 
coverage more portable and secure for employees, and the Newborns' and 
Mothers' Health Protection Act of 1996, the Mental Health Parity Act 
of 1996, and the Women's Health and Cancer Rights Act of 1998 added 
new responsibilities to PWBA's education, compliance assistance, and 
enforcement functions. 

[7] Many of PWBA's enforcement and compliance employees are attorneys 
or accountants. 

[8] Plan service providers are third parties who assist plan sponsors 
in administering or providing other services to the plan. 

[9] For a defined contribution pension plan, the employer establishes 
an individual account for each eligible employee and generally 
promises to make a specified contribution to that account each year. 
Employee contributions are also often allowed or required. The 
employee's retirement benefits depends on the total employer and 
employee contributions to the account as well as the investment gains 
and losses that have accumulated at the time of retirement or 
withdrawal. Therefore, the employee bears the risk of loss as to 
whether the funds available at retirement will provide a sufficient 
level of retirement income. 

[10] The number of investigations completed in a given year includes 
investigations opened in prior years and closed in the current year. 

[11] P.L. 105-92, Nov. 19, 1997. 

[12] U.S. General Accounting Office, Retirement Saving: Opportunities 
to Improve DOL's SAVER Act Campaign, [hyperlink, 
http://www.gao.gov/products/GAO-01-634] (Washington, D.C.: June 26, 
2001). 

[13] PWBA's guidance includes a VFC Fact Sheet on its Internet site 
and Federal Register Notice, Volume 65, Number 51, "Voluntary 
Fiduciary Correction Program," March 15, 2000. Also, to be eligible 
for the VFC program, plans and applicants must not be under 
investigation by PWBA, and the application must not contain evidence 
of potential criminal violations, as determined by PWBA. 

[14] See U.S. General Accounting Office, Private Health Insurance: 
Federal Role in Enforcing New Standards Continues to Evolve, 
[hyperlink, http://www.gao.gov/products/GAO-01-652R] (Washington, 
D.C.: May 7, 2001). 

[15] Pension, welfare, and fringe benefit plans are generally required 
to file an annual report on their financial condition, investments, 
and operations called the Form 5500 Annual Return/Report of Employee 
Benefit Plan. The Department of Labor, IRS, and PBGC jointly develop 
and maintain the Form 5500 series so employee benefit plans could 
satisfy annual reporting requirements under Title I and Title II of 
ERISA and under the Internal Revenue Code. 

[16] PWBA's VFC Program Notice states that section 3003(c) of ERISA 
obligates Labor to report prohibited transactions to the IRS. Under 
section 4975 of the Internal Revenue Code, the IRS may levy a 15-
percent excise tax on prohibited transactions. 

[17] U.S. General Accounting Office, Human Capital: A Self-Assessment 
Checklist for Agency Leaders, [hyperlink, 
http://www.gao.gov/products/GAO/OGC-00-14G] (Washington, D.C.: Sept. 
2000). 

[18] [hyperlink, http://www.gao.gov/products/GAO/OCG-00-14G]. 

[19] We previously criticized this performance measure in our 
assessment of Labor's fiscal year 2002 annual performance plan. See 
U.S. General Accounting Office, Department of Labor: Status of 
Achieving Key Outcomes and Addressing Major Management Challenges, 
[hyperlink, http://www.gao.gov/products/GAO-01-779] (Washington, D.C.: 
June 15, 2001). 

[End of section] 

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