The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) says industry speculation that a major drop in the reported dollar value of civil and criminal collections made on behalf of employee benefit plans in 2014 is the result of weaker efficiency or a shift in auditing policy misses the mark.
As explained in EBSA’s recently published 2014collection and enforcement action fact sheet, the agency’s investigators recovered $599.7 million in direct reimbursements for employee benefit plans and participants during 2014. The total come from 3,928 civil investigations closed by EBSA in 2014, with 2,541 of those cases (64.7%) resulting in monetary compensation for plans or other corrective action. The previous year, EBSA reported more than double the monetary collections arising from 3,677 closed investigations, in which violations were found nearly 73% of the time. Taken together, plan sponsors paid a collective $1.7 billion in plan reimbursements and fines to EBSA to settle criminal cases and civil violations in 2013. (The 2013 numbers are reported here.)
Responding to industry questions around the cause of what appeared to be a major yearly decline in collections, EBSA says the top-line drop from 2013’s reported $1.7 billion to 2014’s reported $599.7 million does not tell the whole collections story. The agency provided an explanation of the nominal decline to PLANADVISER:
“The 2013 and 2014 numbers are not apples-to-apples,” the agency explains. “EBSA changed the report [this year], so that the ~$600 million for 2014 includes only dollars that went back into people’s pockets—both plans and participants—and does not include categories such as “prohibited transactions corrected” that are part of the 2013 and previous years’ numbers. So the difference in the numbers reflects a change in reporting for 2014, not a dramatic decrease in recoveries. If anything, the $600 million is a better reflection of the actual dollars going back to plans and participants.”
EBSA also tells PLANADVISER its emphasis has been on helping field offices and the public understand and focus on actual dollars going back into people’s pockets. “We are still tracking other categories of monetary recoveries,” EBSA says, “but what you see in the 2014 report is the most accurate reflection of real money going back to plans and participants.”
For an apples-to-apples comparison number, EBSA suggests a better 2014 number to use is $823.2 million. The explanation continues: “One thing to add, and it is important context, is that the larger 2013 number included one prohibited transaction correction (which is one of the big categories EBSA did not put in the headline 2014 number that was reported online) representing about $500 million. While you do see a drop from the $1.6 billion for 2013 and the $823 million for 2014, a major piece of that was a result of a single case.”
Additionally, EBSA says its reporting for 2014 did not count results from the Abandoned Plan Program, which provides remedies for plans lacking a sponsor or plan trustees—for example if the owner of a small business dies without a succession plan in place. Taking this into account, EBSA says the two numbers that are 100% relatable by categories included for 2014 and 2013 are $581.3 million and $499.7 million, respectively.
“We are still tracking and using all of the numbers,” EBSA concludes. “We have simply changed the format of what we are presenting to the public, to give to the public what we think is the most useful and relevant data.”