[11802]
April 12, 2000
TO: PENSION COMMITTEE No. 24-00
PENSION OPERATIONS ADVISORY COMMITTEE No. 27-00
RE: DOL PUBLISHES "STRATEGIC ENFORCEMENT PLAN"
______________________________________________________________________________
The Department of Labor’s Pension and Welfare Benefits Administration (PWBA) has
published a “Strategic Enforcement Plan (StEP)” identifying its current enforcement goals, priorities and
methods, and the manner in which it promotes compliance with Title I of ERISA. The release
specifically identifies defined contribution plans and plan service providers as areas of PWBA
investigative priority.
The PWBA enforcement strategy includes targeting specific individuals or entities identified for
investigation because of some indication that an ERISA violation may have occurred or may be about
to occur. The targeting process is conducted, for example, by opening a single case based on plan
participant information or opening “hundreds” of cases based on computer-generated results of Form
5500 review and analysis. Field offices are generally responsible for identifying potential investigative
targets and determining which cases are to be opened; in certain cases, these activities may be
coordinated with the national PWBA Office of Enforcement.
The StEP release states that PWBA seeks to apply its enforcement resources to protect those
participants and beneficiaries whose security and livelihood are in the greatest danger of being harmed as
a result of ERISA violations. As part of this effort, all PWBA field offices are engaged in outreach
efforts designed to assist “potentially vulnerable populations.” Examples provided in the release include
employees whose benefits are affected by plant closings and “plans for which benefits are not federally
insured, such as 401(k) plans.” The release also notes, however, that enforcement action is warranted to
“ensure the integrity of the system,” regardless of whether any actual harm incurred. Specifically,
situations involving self-dealing, conflicts of interest and gross imprudence are examples of violations
that may warrant investigation even in the absence of demonstrated harm to a plan or plan participants.
As noted above, of the three national investigative priorities identified in the release, one is
defined contribution plans and another plan service providers. (The third area of focus is health care
plans.) With respect to defined contribution plans, the release notes the tremendous growth of 401(k)
plans and explains that because such plans are not covered by PBGC insurance the risk of loss due to a
fiduciary breach is irrevocable unless funds can be recovered through enforcement or other legal action,
and the risk of loss in such plans is borne entirely by the plan participants. With respect to plan service
providers, the release states that investigations of service providers offer the opportunity to address
abusive practices that may effect more than one plan and generally result in larger recoveries for more
plans and more participants. In these investigations, the PWBA notes that it generally focuses on
abusive practices committed by the specific service providers rather than the plans. One example
provided in the release is the case of a third party administrator systematically retaining an undisclosed
fee.
2A copy of the Strategic Enforcement Plan is attached.
Russell G. Galer
Senior Counsel
Attachment