House Holds Hearing About Transparency and Oversight at EBSA

House Republicans took aim at retirement benefit oversight during a hearing held July 22 titled “Restoring Trust: Enhancing Transparency and Oversight at EBSA,” held by the Subcommittee on Health, Employment, Labor, and Pensions. 

The session focused on alleged mismanagement and lack of accountability at the Employee Benefits Security Administration where Representatives discussed the agencies’ use of common interest agreements and its general enforcement practices.  

A common interest agreement is when EBSA shares information it learns during an investigation with plaintiffs involved in ERISA-related litigation, which plan sponsor lawyers argue is unfair to fiduciaries.  

Two bills have been proposed this year by House Republicans to increase oversight on the agency: the Balance the Scales Act and the EBSA Investigations Transparency Act.  

The Balance the Scales Act would require EBSA to file an annual report about its use of common interest agreements and require the agency to provide a copy of the agreement to affected fiduciaries. 

The EBSA Investigations Transparency Act would force EBSA to file an annual report to Congress that provides a status update about its pending investigations, such as which office is in charge of the investigation and when it began. The agency would also have to justify any investigation that lasts more than three years. 

Subcommittee Chairman Rick Allen (R-Georgia) opened the hearing by criticizing EBSA’s practices under the Biden administration for “inefficient employee benefit plan investigations that lasted for years” that would hurt Americans, he said. 

At the center of the debate was growing Republican frustration with what Representatives described as a lack of transparency, politically motivated enforcement, and protracted investigations into employee benefit plans. Multiple GOP lawmakers said that reforms were necessary, such as what the two proposed bills would require from the agency. 

In addition to several scathing remarks from House Republicans, Jim Bonham, President and CEO of the ESOP Association, testified to what he said were longstanding regulatory challenges faced by employee ownership plans during the hearing. 

In January, President Donald Trump signed an executive order withdrawing any proposed federal rules that had not been published in the Federal Register prior to January 20, causing proposed rules regarding employee stock ownership plans to be withdrawn. 

Andrew Banducci, the Senior Vice President at the ERISA Industry Committee also testified, in which he argued that “EBSA’s investigations are taking too long,” and compared their investigations to “fishing expeditions.”  

Ali Khawar, the former deputy head of EBSA, defended the agencies actions during the Biden administration during the hearing indicating that there were only 12 common interest agreements in the last 15 years but said that ERISA grants the agency the right to share information with interested parties.  

As for the accusations of unnecessarily long investigations, Khawar said that nearly 3% of investigations went on for more than 4 years as of November 2023, with most of the lengthier cases not involving retirement issues.