Compliance February 1, 2018

EBSA Restores $1.1B to Benefit Plans, Participants and Beneficiaries

Nearly $700 million was in recoveries from enforcement actions.

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By enforcing the Employee Retirement Income Security Act (ERISA), the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) restored more than $1.1 billion to retirement plans, health plans and other welfare benefit plans such as those providing life or disability insurance, in fiscal year 2017.

During the year, EBSA closed 1,707 civil investigations, with 1,114 of those cases, or 63.5%, resulting in $682.3 million recovered. Of this sum, $326.7 million was for benefits owed to terminated vested participants in defined benefit plans.

Additionally, EBSA recovered $418.7 million from informal complaint resolutions. EBSA investigations led to the indictment of 113 people—including plan officials, corporate officers and service providers—for crimes related to employee benefit plans. Through its Abandoned Plan Program, EBSA worked with 586 plans to distribute $27.9 million to participants after the plans were terminated.

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In 2017, EBSA received 1,303 applications for its Voluntary Fiduciary Correction Program and 22,139 annual reports for its Delinquent Filer Voluntary Compliance Program. In 2017, EBSA conducted 1,816 education and outreach events for workers, employers, plan officials and members of Congress. “These nationwide activities include assisting dislocated workers who are facing job loss, educating employers of their obligations under ERISA, using a train-the-trainer format to inform Congressional staff of EBSA programs for their use in constituent services, and providing employees with information concerning their rights under the law,” EBSA says.

EBSA also reaches workers, retirees, employers, plan service providers and the public through its printed materials and website at www.dol.gov/agencies/ebsa. In 2017, EBSA distributed 321,815 publications and had 4.17 million unique visitors to its website.

EBSA’s full report on its activities in 2017 can be viewed here.
Data & Research January 31, 2018

Empower Finds Projected Retirement Income Feature Engages Participants

Over a six-year period, projected income replacement scores in plans managed by Empower increased from 68% to 77.8%

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As known within the retirement industry, retirement saving can be a laborious duty for participants. For plan sponsors and advisers, urging employees to take action towards retirement planning can be an even tougher debacle.

Due to a lack of retirement planning emphasis found in solely predicting and eyeing account balances, Empower Retirement altered the attention to present an estimated monthly income replacement in retirement for participants.

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Started in December 2010 and conducted through September 2016, Empower studied participant savings outcomes upon introducing predicted monthly retirement income, and found that employees in their plans are likely to save better and have higher engagement. Before implementing the new approach, Empower would present participants with an accumulated balance of assets to show retirement savings. According to the company, the change began when Empower started utilizing both the monthly income replacement rate and accumulated balance forms, after the idea of a monthly income rate for participants was created.

The study shows that when individuals view their projected monthly income in retirement, those who take action increase their savings rate by 8% (7.07% to 8.4%), on average.

To add a more holistic view on retirement income, Empower then added a health cost estimator and a peer comparison feature, including using web sessions for participants.

Those who gained insight on health care costs in retirement saved more in order to meet their expense goals, with a 22% increase in deferral rates (8.64% to 10.54%). In addition, peer comparison was a great motivator. Individuals  presented with data that shows how much their peers are saving and have already accumulated made an average savings increase just under 22% (7.8% to 9.49%).

Overall, the study found that over a six-year period, projected income replacement scores in plans managed by Empower increased from 68% to 77.8%. Participants over the six-year period were 30,000 employees from 569 of Empower’s retirement plans, with each using Empower’s Participant Experience feature. 

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