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The U. S. Department of Labor’s Pension and
Welfare Benefits Administration (PWBA) today published a final rule to improve
the security of more than $300 billion in assets held in private-sector
pension plans maintained by small businesses.
"This rule is an important step for enhancing the
security of participants and beneficiaries in small pension plans," said
Secretary of Labor Alexis M. Herman. "We believe the final rule strikes a
reasonable balance between enhanced security and accountability for small plan
assets while minimizing the administrative burdens and costs to plans and their
sponsors.
"Our appreciation goes to those who gave us input
in shaping requirements that will give millions of working Americans greater
assurance that their retirement money will be there at retirement,” Herman
said.
In recent years, considerable public attention has
focused on the potential vulnerability of small plans to fraud and abuse.
Although such circumstances are rare, the department decided it was appropriate
to strengthen the security of pension assets and the accountability of persons
handling those assets.
Currently, pension plans with fewer than 100
participants are exempt from the requirement to have an independent qualified
public accountant conduct an annual audit of the plan’s financial
statements. On Dec. 1, 1999, the department published a notice of proposed
rulemaking containing additional criteria for small pension plans to be exempt
from the annual independent audit requirement under the Employee Retirement
Income Security Act (ERISA).
The final regulation, which is largely unchanged
from the proposal, is designed to safeguard small pension plan assets by adding
new conditions to the audit waiver requirement which focus on persons who hold
plan assets, enhanced disclosure to participants and beneficiaries, and
improved bonding requirements. Clarifying changes were adopted in response to
public comments. In addition to clarifying the application of the rule, the
department extended the effective date of the rule to give the employee benefit
community more time to comply with the new requirements.
The new conditions in the final rule will apply to
the first plan year starting after April 17, 2001. The final rule is scheduled
to be published in the Oct. 19, 2000 Federal Register. |
