The Department of Labor can better protect plan participants by strengthening its enforcement program, a recent General Accounting Office report said.
The GAO report said although the Labor Department has improved enforcement efforts since 1986, more work needs to be done.
The department's Pension and Welfare Benefits Administration never has evaluated its current enforcement strategy, the report said. The evaluation is needed to determine whether the PWBA is focusing on the right issues, the report said.
In addition, the PWBA has done little to evaluate the effectiveness of computer targeting programs used to investigate fiduciary violations. The GAO recommended the PWBA randomly test plans instead of focusing on major offenders. Random testing, the GAO said, would give a more representative view of all pension plans.
A third way to strengthen enforcement efforts is to increase penalties to pension law violations, the report said. From 1990 to 1993, the PWBA fined 11 of 48 welfare or unqualified pension plans that had committed a prohibited transaction. The remaining 37 plans were not penalized because the Labor Department lacked the resources if these cases went to court. Sometimes these cases cost more to litigate than the fine the department would receive.
The report said the Labor Department disagreed with the GAO's recommendations. Based on its current strategy, the Labor Department said in the report it is using its resources effectively, although they are "extremely limited in view of the large universe of participants and plans covered by ERISA."
