Audit Report
This report reflects the findings of the Office of Inspector General
at the time that the audit report was issued. More current information
may be available as a result of the resolution of this audit by the Department
of Labor program agency and the auditee. For further information concerning
the resolution of this report's findings, please contact the program agency.
Report Number: 09-97-004-12-121
Issue Date: August 25, 1997
The Employee Retirement Income Security Act of 1974 (ERISA) established a significant number of reporting and disclosure requirements to protect employee benefit plan participants and beneficiaries. The Office of Inspector General (OIG) conducted a performance and compliance audit of the Pension and Welfare Benefits Administration's (PWBA) reporting and disclosure function.
The objectives of our audit were to answer the following questions:
B. Is the information reported and disclosed by plans used by PWBA and the plan participants?
C. Are there more economical ways to obtain the information, store it, and make it available to the public?
D. Are the reporting and disclosure requirements
necessary to achieve the intent of ERISA?
(1) PWBA was not effectively enforcing ERISA requirements for plans to submit SPDs and SMMs to the U.S. Department of Labor (DOL),According to our analysis of PWBA records, 59 percent of the plans filing Form 5500 annual reports had not filed SPDs with DOL as required.(2) PWBA did not need SPDs or SMMs to be submitted to meet its responsibilities under ERISA, and
(3) Public and private funds were being wasted by current ERISA requirements for SPDs and SMMs.
Public funds ($500,000 annually) could be put to better use if regulations regarding reporting and disclosure requirements were revised to:
(1) require DFEs that file to use a standard form which can be used with PWBA's ERISA Information System ($290,000) andIn addition, according to a PWBA estimate, private sector annual costs of approximately $2.5 million and 150,000 burden hours would be saved if Congress amends ERISA to eliminate filing SPDs and SMMs with DOL.
(2) eliminate filing requirements for SPDs and SMMs ($210,000).
The reporting and disclosure requirements were generally necessary to achieve the intent of ERISA. However, the requirement to file SPDs and SMMs with PWBA were unnecessary and PWBA needed to continue its efforts to have Congress amend ERISA to repeal this requirement. This supported previous conclusions and recommendations made by PWBA and the National Performance Review (NPR).
PWBA attributed the weaknesses identified to limited available resources. Other areas and projects have been given higher priorities and resources have not been available to improve the DFE reporting process or enforce SPD and SMM filing requirements.
We recommended that the Assistant Secretary for Pension and Welfare Benefits:
(1) Standardize DFE filing formats using the Form 5500 framework,PWBA stated that the OIG recommendations essentially concurred in two PWBA initiatives that predate the OIG audit and did not take issue with the substance of the recommendations. They stated that the OIG audit report provided an independent confirmation that initiatives already being pursued are in the public interest and consistent with PWBA's statutory mission.(2) Incorporate DFE filings into the Form 5500 process and the ERISA Information System,
(3) Develop procedures to identify DFEs not filing annual reports and take appropriate action,
(4) Determine whether the filing and storage of SPDs and SMMs can be discontinued immediately to reduce costs, and
(5) Continue efforts to seek legislative change to eliminate the requirements for SPDs and SMMs to be filed with DOL.
The legislative changes needed to discontinue SPD and SMM filings became effective on August 5, 1997 with the passage of the Taxpayer Relief Act of 1997, Public Law 105-32. Our two recommendations regarding SPDs and SMMs are resolved and closed.