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community — which currently includes According to EBSA officials, major updated records for participants vested
over 700,000 retirement plans, about cases are more resource intensive; there- in company retirement plans.”
2.5 million health plans, and countless fore, in that same period, the total num- EBSA officials told GAO that the agency
service providers.” ber of investigations that were closed focuses on the participants “who may face
Overall, the size of EBSA’s full-time dropped by more than 62%. financial hardship if they don’t receive
regional office enforcement staff started “The DOL’s more selective and tar- their promised retirement benefits on
at 506 in FY2011, peaked in FY2014 at geted enforcement activity in recent time and without excessive fees, espe-
569, and ended in FY2020 at 492 — 97% years is in marked contrast to the explo- cially during economic downturns.” As a
of where it started, the Eversheds attor- sion of private litigation that is engulf- result, GAO said, “the increase in missing
neys state. By comparison, the Securities ing pension and health plans over all participants may lead to a greater need for
and Exchange Commission “has a staff manner of issues — fees, disclosures, related enforcement investigations.”
of over 2,400 personnel engaged in com- conflicts, investment performance, ben- Retirement plan administrators “have
parable functions.” efits administration,” said Brian Doyle, an obligation to keep accurate and up-
The GAO report also includes details a partner at O’Melvney & Myers LLP in to-date records on plan participants and
about the enforcement priorities take appropriate actions to find
of EBSA at both the national and The GAO found that as virtual missing former employees, so the
regional level. plan can pay promised benefits
hearings increased, litigation when they come due,” GAO said.
FOCUS ON ‘MAJOR CASES’ resumed, but finding missing EBSA officials told the GAO
EBSA argued in a 2012 paper, that “many missing participants
the Eversheds attorneys state, participants would remain a are not aware of their benefits
“that it would best leverage its long-term challenge and may and, without the plan’s diligent
resources and maximize recover- efforts, may never receive their
ies for plans and participants if be an area that needs more benefits,” the report states.
it focused its investigations on “Several stakeholders men-
‘major cases’ involving service investigative resources. tioned the challenge of locating
providers to many plans or plans missing participants, which exist-
with systemic compliance problems.” Washington, who specializes in ERISA, ed prior to COVID-19, and their desire for
The agency has since steered its enforce- in an email to Investment Advisor. “If additional guidance about the steps plans
ment efforts towards these major cases. one assumes that DOL has less institu- must take to locate them,” the GAO said.
“The GAO report attributes a 62% tional interest in targeting plans that the These stakeholders expected the
decrease in the enforcement cases ERISA plaintiffs’ bar is already swarm- increase in job loss due to the pandemic
closed annually over the 10-year period, ing, then the list of available investigation to lead to more missing participants,
accompanied by a 126% increase in the targets is going to continue to narrow.” which would make finding them even
annual dollar amount of recoveries, pri- DOL actions against registered more difficult, the GAO said.
marily to the major case emphasis,” the investment advisors, Doyle continued, In early January, EBSA issued miss-
Eversheds attorney said. “have historically been less common ing participants guidance that set out
Major cases may include investigations than other DOL enforcement activity, a range of best practices fiduciaries of
of service providers with many plans and and that hasn’t changed in my estima- retirement plans, such as 401(k) plans,
plan participants or systemic problems in tion. Consistent with the overall trend should consider as steps their plan could
the plan that may require significant asset in ERISA litigation, though, some of take to help reduce missing participant
the actions DOL has commenced more
issues and ensure that plan participants
management or administrative reforms,
DCStockPhotography/Shutterstock eries for participants more than dou- theories that put big numbers in play.” reach retirement age.
receive promised benefits when they
recently rest on increasingly audacious
the attorneys state. Total monetary recov-
bled from fiscal year 2011 through 2020,
In fiscal year 2020, EBSA reports that
MORE ‘MISSING’ PARTICIPANTS
its investigators helped missing and nonre-
according to the GAO report.
sponsive participants recover benefits with
“The focus on major cases, which began
INVESTIGATIONS
a present value in excess of $1.4 billion.
in 2013, accounts for much of that growth,
The GAO report notes that while an
increase in job loss may lead to an increase
with nearly 80% of total recoveries from
all sources coming from major cases in
in missing retirement plan participants,
Washington Bureau Chief Melanie Waddell can
2020,” the Eversheds attorneys said.
“failing businesses may struggle to keep
be reached at [email protected].
JULY/AUGUST 2021 INVESTMENT ADVISOR 11