Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.
Compliance November 30, 2021
DOL Enforcements Result in $2.4B in Recoveries for Plans, Participants and Beneficiaries
An Employee Benefits Security Administration report offers insight on how the agency gets leads for its enforcement actions.
Reported by DJ Shaw
Through its enforcement of the Employee Retirement Income Security Act (ERISA), the Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA) recovered more than $2.4 billion for employee benefit plans, participants and beneficiaries in fiscal year (FY) 2021.
In addition to reporting enforcement results, an EBSA fact sheet offers information about how the agency gets leads for its enforcement actions. The data shows of that $2.4 billion total, $1.9 billion was recovered from enforcement actions, $34 million came from the agency’s Voluntary Fiduciary Correction Program (VFCP), $50.8 million was from its Abandoned Plan Program and $499.5 million was recovered from the resolution of informal complaints.
EBSA’s oversight authority extends to nearly 734,000 retirement plans, 2 million health plans and 662,000 other welfare benefit plans, such as plans providing life or disability insurance. It has responsibility for investigating potential criminal conduct, including violations of the criminal provisions of ERISA and those in the United States Criminal Code that concern employee benefit plans or general financial crimes.
In FY 2021, there were 188 criminal investigations opened, 208 were closed and 118 of those opened involved health benefit plans. These investigations led to 72 indictments—39 of which were related to health benefits plans and 16 of which stemmed from EBSA’s Contributory Plans Criminal Project (CPCP). The CPCP is EBSA’s initiative to protect plans, and participants in plans, that are funded (in whole or in part) through employee contributions that are withheld from wages.
The agency notes in its report that the VFCP and Delinquent Filer Voluntary Compliance Program (DFVCP) encourage the correction of ERISA violations by providing significant incentives for fiduciaries and others to self-correct. The VFCP allows plan officials who have identified specific ERISA violations to take corrective action without becoming the subject of an enforcement action. In FY 2021, ESBA received 1,201 applications for the VFCP. Additionally, the DFVCP, which encourages plan administrators to bring their plans into compliance with ERISA’s filing requirements, received 22,553 reports.
While EBSA often pursues voluntary compliance to correct violations and restore losses to employee benefit plans, in cases where voluntary compliance efforts have failed, or are inappropriate, the agency forwards a recommendation to the solicitor of labor to initiate litigation. Both the EBSA and the solicitor of labor determine which cases are appropriate for litigation, after considering the ability to obtain meaningful relief through litigation, the cost and the viability of other enforcement options. In FY 2021, 70 cases were referred for litigation. Even after referral to the solicitor of labor for litigation, the department can often resolve claims for monetary relief without filing suit.
The Abandoned Plan Program facilitates the termination and distribution of benefits from individual account pension plans abandoned by their sponsoring employers. During FY 2021, EBSA received 1,770 applications from qualified termination administrators and closed 923 applications with terminations approved.
Other leads for enforcement come from employee complaints. When employees experience a problem with a benefit plan, they can contact EBSA benefit advisers for assistance. Through this informal complaint resolution process, benefits advisers closed more than 175,000 inquiries. These inquiries can sometimes lead to enforcement actions if the agency receives repeated complaints on a particular plan, employer or service provider, or when there is information indicating an ERISA violation. There were 251 investigations opened from inquiry referrals.