U.S. Department of Labor (DOL) monetary recoveries on behalf of benefit programs and participants by its Employee Benefits Security Administration (EBSA) unit totaled more than $1.6 billion for fiscal year (FY) 2018, up 45 percent from the $1.1 billion recovered in FY 2017, statistics from the department showed.
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Of the $1.6 billion recovered, the bulk—$1.1 billion—came from enforcement actions. EBSA said it closed 1,329 civil investigations, with 64.7% of these cases resulting in monetary recoveries or other corrective action, according to the statistics released in an EBSA fact sheet in early 2019.
Recoveries valued at $807.7 million on behalf of terminated vested participants in defined benefit (DB) programs played a large role in the FY 2018 results, the agency said. This more than doubled the previous year’s total of $326.7 million recovered for terminated vested participants.
EBSA in recent years has made investigations involving such terminated vested participants a significant enforcement priority, and many large Employee Retirement Income Security Act (ERISA) DB pension plans have been the subject of these investigations.
Methods of Recovery
EBSA said its recoveries included plan assets, participant benefits, disgorgement of profits, reversal of prohibited transactions, and voluntary fiduciary corrections. The figures also include amounts recovered through the abandoned plan program and informal complaint resolution.
The agency also referred 111 cases for civil litigation following failed efforts for voluntary compliance by the plans. DOL actually filed suit in 56 such cases. In the criminal area, EBSA closed 268 criminal cases (87 with convictions or guilty pleas) and obtained indictments against 142 individuals, including plan officials, corporate officers, and service providers. All those statistics are comparable with FY 2017.
Key Points
Here are some other key points from EBSA’s reporting on its enforcement activities for the year that ended September 30, 2018:
- Through its abandoned plan program, EBSA received 910 applications from Qualified Termination Administrators, and closed 843 of them with terminations approved, a significantly higher closure rate than the previous fiscal year.
- Distributions of $33.4 million were made directly to participants by 658 terminating plans involved in the abandoned plan initiative.
- EBSA received 1,414 applications for its Voluntary Fiduciary Correction Program (VFCP) and Delinquent Filer Voluntary Compliance Program (DFVCP), up from 1,303 the year before. EBSA recovered $10.8 million from VFCP resolutions. The program provides incentives for fiduciaries and others to self-correct without becoming the subject of an enforcement action.
- The DFVCP accepted 19,937 annual reports, down somewhat from 22,139 accepted in FY 2017.
Continuing Objectives
EBSA objectives continue to include going after unjust profits and recovering losses from fiduciary breaches and plan-provider misconduct. The DOL’s “Strategic Plan for Fiscal Years 2018-2022” said its investigations are to be targeted using data analysis, prompt pursuit of violations, monetary recovery, and investigation of plan participant tips and complaints.
As part of more targeted enforcement, the DOL said it seeks to increase efficiency based on three specific performance measures, which include the following targets:
- $16,936 in major-case recoveries per major-case staff day;
- $30,737 in monetary recoveries on major cases closed per staff day; and
- 70% of delinquent employee contribution, abandoned plan, and other reporting and disclosure breach cases closed or referred within 18 months of case opening.
In addition to its litigation results in the latest fiscal year, EBSA’s informal complaint resolution program closed more than 170,000 inquiries and recovered $443.2 million in benefits on behalf of workers who directly contacted the agency about their benefits. The program responds to individual complaints received through phone calls to the agency or its website. EBSA said 524 new investigations were opened in FY 2018 as a result of referrals from its benefits advisers to the complaint program.
In general, the EBSA report said it had 4.43 million visitors to its website in the latest fiscal year and it distributed 385,520 resource publications, both metrics up a bit from FY 2017. It also conducted a total of 1,829 outreach events in the year, ranging from congressional briefings to dislocated worker rapid response sessions and compliance assistance activities.
The nearly 694,000 retirement plans, 2.2 million health plans, and other welfare benefit plans that EBSA oversees included assets of $9.8 trillion, EBSA said in its most recent fact sheet on recoveries. The benefit plans cover approximately 143 million workers and their dependents.