PWBA
PENSION AND WELFARE
BENEFITS ADMINISTRATION

STRATEGIC PLAN
FY 1999- FY 2004

Table Of Contents

SECTION 1: INTRODUCTION

SECTION 2: THE CHANGING WORKFORCE AND WORKPLACE

SECTION 3: DEPARTMENT OF LABOR STRATEGIC AND OUTCOME GOALS

SECTION 4: RELATIONSHIP BETWEEN GOALS IN THE ANNUAL PERFORMANCE PLAN AND THE STRATEGIC PLAN

SECTION 5: CONSULTATION WITH STAKEHOLDERS

SECTION 6: CROSS-CUTTING COORDINATION

SECTION 7: PROGRAM EVALUATIONS

SECTION 8: DATA CAPACITY

SECTION 9: MAINTAINING A DEPARTMENTAL STRATEGIC MANAGEMENT FOCUS

SECTION 10: CONCLUSION

SECTION 1:INTRODUCTION

Agency Mission

The Pension and Welfare Benefits Administration (PWBA) is primarily responsible for the administration of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The outcome of PWBA’s efforts is to ensure the integrity of pensions, health plans, and other employee benefits for more than 150 million employees, retirees, and their dependents. PWBA facilitates plan participants and beneficiaries obtaining the information they need to participate in and protect their benefits, assists plan officials in understanding their legal responsibilities, develops policies that encourage the growth of employment-based benefits, and deters and corrects violations of ERISA and other relevant statutes.

Vision

PWBA takes seriously the Congressional view in the introduction to ERISA that “the continued well-being and security of millions of employees and their dependents are directly affected” by employee benefit plans, and is committed to taking regulatory and enforcement actions that will be both protective of the interests of participants and beneficiaries and encourage the creation and growth of health benefit and pension plan coverage. In fulfilling that commitment PWBA will:

• provide leadership in the broad range of national retirement, health and employee benefits-related policy;
• implement reasonable and responsive regulations which provide investment flexibility for pension plans and design flexibility for health and other welfare plans, with only those burdens imposed on the public which are necessary to protect the benefit security of participants and beneficiaries;

• protect plans and their participants, and positively affect the behavior of those who have responsibility for employee benefit plans by concentrating our resources on carefully selected areas with significant abuse potential through a balanced mix of compliance assistance and enforcement activities;
• adapt to a rapidly evolving global investment market place;
• establish and maintain a professional, customer-focused and results-based organization to carrying out all responsibilities;

• maintain efficient, effective, progressive, and accessible program management; and

• maintain PWBA as a diverse and quality workplace that promotes life long learning

About PWBA

ERISA is the seminal piece of employee benefits legislation enacted in the United States. While ERISA is frequently referred to as pension reform legislation, it affects almost all types of private employee benefit plans. There are over 6 million private employee benefit plans, which cover approximately 150 million people, including workers, their families, and retirees, and control more than $4.3 trillion in assets. Due to the enormity of the plan universe, the number of people covered, and the importance of pension assets to our capital markets, protecting the pension security of American workers is and will continue to be a major focus in the years ahead.

PWBA’s health-related responsibilities continue to increase dramatically as a result of: (1) significant new federal health benefits statutes which create extensive new rule-making, enforcement, and assistance responsibilities for the Secretary of Labor; (2) greater incidence of self-insured health plans which gives PWBA jurisdiction over most aspects of the operation of employment-based plans due to ERISA’s broad preemption provisions; and (3) continued evolution of the employment- based health care system toward managed care and self-insurance arrangements.

Today, nearly three of four workers with private sector employment-based health benefits are enrolled in a plan with some type of managed care characteristic, and a majority of these participants are in plans with a component of self-insurance. Because ERISA preempts state laws, this places the enforcement, education, customer service, interpretive and regulatory burden nearly entirely on PWBA. In addition, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other new health legislation have imposed significant new responsibilities on PWBA in this area.

In 1974 ERISA was enacted to address public concern that private pension plans were being mismanaged and abused. ERISA was the culmination of a long line of legislation concerned with the labor and tax aspects of employee benefit plans. Since its enactment, ERISA has been amended numerous times to meet the evolving private employee benefit system as well as the retirement and health plan needs of employees and their families. PWBA has also evolved to meet these challenges.

The goal of Title I of ERISA is to protect the interests of participants and their beneficiaries in employee benefit plans. Among other things, ERISA requires that sponsors of private employee benefit plans provide participants and beneficiaries with adequate information regarding their plans. Also, those individuals and other fiduciaries who manage plans must meet certain standards of conduct, derived from the common law of trusts and made applicable with certain modifications to all fiduciaries. The law also contains detailed provisions for reporting and disclosure to both government and plan participants. Furthermore, there are civil enforcement provisions aimed at assuring that plan funds are protected and that participants who qualify receive their benefits.

ERISA covers pension plans and welfare benefit plans (e.g., employment based medical and hospitalization benefits, apprenticeship plans, and other plans described in section 3(1) of Title I). Plan sponsors must design and administer their plans in accordance with ERISA. Title I of ERISA requires persons and entities who manage and control plan funds to:

• manage plans for the exclusive benefit of participants and beneficiaries;

• carry out their duties in a prudent manner and refrain from conflict-of-interest transactions expressly prohibited by law;

• comply with limitations on certain plans' investments in employer securities and properties;

• fund benefits in accordance with the law and plan rules;

• report and disclose information on the operations and financial condition of plans to the government and participants; and

• provide documents required in the conduct of investigations to assure compliance with the law.

Legislation Since ERISA

Important legislation has amended ERISA and increased the responsibilities of PWBA. For example, the Retirement Equity Act of 1984 reduced the maximum age that an employer may require for participation in a pension plan; lengthened the period of time a participant could be absent from work without losing pension credits; and created spousal rights to pension benefits through qualified domestic relations orders (QDROs) in the event of divorce, and through pre-retirement survivor annuities. The Omnibus Budget Reconciliation Act of 1986 eliminated the ability of employers to limit participation in their retirement plans for new employees who are close to retirement and the ability to freeze benefits for participants over age 65.

The Department's responsibilities under ERISA have also been expanded by health care reform. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) added a new part 6 to Title I of ERISA which provides for the continuation of health care coverage for employees and their beneficiaries (for a limited period of time) if certain events would otherwise result in a reduction in benefits. More recently, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) added a new Part 7 to Title I of ERISA aimed at making health care coverage more portable and secure for employees, and gave the Department broad additional responsibilities with respect to private health plans. Finally, the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women’s Health and Cancer Rights Act of 1998 added significant new responsibilities in the education, compliance assistance, and enforcement activities of PWBA.

As a result of the enactment of the Federal Employees’ Retirement System Act of 1986 (FERSA), PWBA has responsibility for auditing oversight of the Thrift Savings Plan, which covers 2.3 million Federal employees.

SECTION 2:THE CHANGING WORKFORCE AND WORKPLACE

Private sector employee benefit plans provide retirement income and benefits on which the majority of our population rely to maintain an acceptable quality of life. The economic security of an individual or family may be jeopardized if pension, health, or other benefits are not paid as promised. Health benefit plans provide for the provision of covered medical services to workers and their families which individuals would otherwise rarely be able to afford. When these plans fail, the burden often falls on public programs to provide affected individuals with necessary services.

Once it was common for employees to have health and retirement coverage directly through and financed primarily by an employer. Recent data show that fewer employees are covered by employer-based health insurance and, while the level of pension coverage has remained static, an increasing number of employees are now covered by 401(k) plans (Figure 1).

Figure 1

These 401(k) plans are financed primarily by voluntary participant contributions which are often supplemented by employer contributions, in contrast to defined benefit plans which are generally financed entirely by the employer, shifting more of the burden for retirement planning and financing to the employee. Where once most pension covered workers could look forward to a determinable lifetime pension benefit after retirement, it is now more incumbent upon workers to take the responsibility of retirement planning into their own hands, with workers bearing the investment risk and often making the investment decisions, and with workers also required, in many cases to voluntarily contribute to the plan as a condition of participation (Figure 2).

Figure 2

To further complicate the dynamics of a changing workforce, developing polices must take into consideration that not all groups have equal access to pension and health care coverage. Figure 3 indicates that smaller businesses lag significantly behind larger businesses in offering pension coverage. Thus, employees of small businesses are less likely to have access to coverage (Figure 3).

Figure 3

Likewise, figures 4 and 5 illustrate how women and minorities are less likely to be covered by a pension plan.

Figure 4

Suffice it to say that the dynamics of an ever changing workforce, the enormity of the pension and health plan universe and the number of participants covered, the proliferation of new benefit arrangements, the incidence of health care fraud, and new health care laws, have greatly expanded PWBA’s responsibilities. The challenge is to aggressively enforce the ERISA Statute to ensure that existing benefits are protected yet create an environment where employers opt to offer pension benefits.

Figure 5

As a result of heightened public interest in basic pension and retirement planning issues, PWBA expects pension-related inquiries to continue to increase in both quantity and complexity. In fact, PWBA already has data that is indicative of this trend (Figure 6).

Figure 6

Figure 6 demonstrates an increase in inquiries made to Pension Benefit Advisers over the past four years as well as the resultant benefit recoveries that have been made with their assistance (This data does not include benefit recoveries as a result of enforcement activity).

PWBA believes that this rise in inquiries as well as the complexity of the questions raised is partially as result of its enhanced outreach and education campaign efforts. PWBA advocates that through education and outreach, participants and beneficiaries are provided with information on what to look for to spot potential problems with their plan contributions. Therefore, the public engages in self-help by recognizing warning signs that may indicate fraud or misuse of these funds.

Health Benefits

PWBA’s responsibilities in the health care area have substantially increased as a result of the implementation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women’s Health and Cancer Rights Act of 1998. These statutes and PWBA’s compliance-related activities potentially impact over 2.5 million group health plans, providing health care coverage to an estimated 123 million participants and beneficiaries and benefit- related expenditures in excess of $250 billion annually.

There has been a significant change in worker health benefits specifically, a shift toward managed care health plans. Today, nearly three of four workers with private sector employment-based health benefits are enrolled in a plan with some type of managed care characteristic. This has increased several fold in the past decade and is likely to continue to expand rapidly to the point that it becomes effectively universal over the next several years. The introduction of the kinds of financial arrangements and the associated gate- keeping and incentive arrangements now common between managed care plan sponsors and medical service providers creates a number of significant interpretive and compliance issues that will need to be addressed. The majority of the participants in the new types of managed care benefit arrangements are in plans with some component of self-insurance. Because ERISA generally preempts state laws, this places the interpretive and compliance burden nearly entirely on PWBA applies the framework of fiduciary requirements and associated participant protections to the new and very complex environment.

These recently enacted health care provisions create shared jurisdiction and shared regulatory responsibility for the Departments of Labor, the Treasury, and Health and Human Services (HHS). The enactment of these health care laws marks a turning point in how group health plans are regulated at the federal level and significantly changes the nature and scope of PWBA’s interpretive and administrative responsibilities.

For example, HIPAA amended ERISA to provide for, among other things, improved portability and continuity of health insurance coverage provided in connection with employment. The HIPAA portability provisions relating to group health plans and health insurance coverage offered in connection with group health plans are set forth under a new Part 7 of Subtitle B of

Title I of ERISA. These provisions include rules relating to preexisting conditions exclusions, special enrollment rights, and prohibition of discrimination against individuals based on health status- related factors.

The PWBA will continue to provide compliance and technical assistance to the participant and employer communities concerning the implementation of the new health laws. PWBA estimates that virtually all people receiving health benefits through an ERISA plan will be impacted in some way by these new laws. PWBA has and will continue to receive a very high volume of requests from individuals and employers for information about their rights or about their responsibilities under the new laws. Others will ask the Agency to intervene in a dispute. It is within this diverse and complex environment that PWBA has developed its 5-year strategic plan.

SECTION 3 DEPARTMENT OF LABOR STRATEGIC AND OUTCOME GOALS

PWBA Strategic and Performance Goals in Support of DOL Strategic Goal 2:

The PWBA mission supports the Department’s Strategic Goal 2--A Secure Workforce. More specifically, PWBA’s mission supports two of the three DOL outcome goals-- Increase compliance with worker protection laws and Protect worker benefits. PWBA’s four strategic goals in support of the Department’s plan are: (1) deter and correct violations of the relevant statutes; (2) facilitate compliance; (3) assist workers in understanding their rights and protecting their benefits; and (4) encourage the growth of employment-based benefits.

PWBA has selected performance indicators that measure our achievement toward the goal of promoting the economic security of workers and families. PWBA also maintains other performance indicators (such as assets restored), and these measures, when taken as a whole with the measures outlined in this plan, more completely represent the full picture of the work of the agency’s employees in

protecting the pension, health and other welfare benefits of American workers. Following are PWBA’s strategic goals in support of the Department’s Goal— A Secure Workforce.

PWBA Performance Goals:

Strategies to Achieve Strategic Goals

Enforcement activities are a prominent activity which support this strategic goal and consequently, is where the vast majority of resources are devoted. However, underlying the enforcement program are a whole array of activities that support our Deter and Correct Performance measure. They include technological enhancements, compliance assistance and education activities.

Technology

PWBA has and continues to take advantage of state-of-the-art technologies as a means for achieving economy of scales and more efficient and effective program delivery. They include:

Implementing the new processing system outside the IRS for Form 5500 Annual Report. The reports are filed annually by employee benefit plans to provide information about plan operations to plan participants and the regulatory agencies. The new system will streamline the process for converting Form 5500 data into electronic format and yield more accurate and timely data for enforcement targeting and public disclosure.

Promoting the electronic filing of the annual reports to reduce the cost and burden of filing, as well as the cost of operating the system.

Developing a system to disclose Form 5500 annual reports via an Internet site to make the data more readily available to participants and to the agencies which use it to protect employee benefits.

Compliance Assistance

A key to PWBA’s success in deterring and correcting violations is education and early intervention. When successful, resources may be diverted to other compliance and outreach activities by avoiding lengthy investigations and complex litigation. Some of the compliance strategies involve:

Increasing compliance of benefit plan filings and related audits by (1) educating filers through establishing a filer Help Desk; (2) refining computerized edit tests and corrective correspondence; (3) expanding outreach with the AICPA and State CPA societies to educate and provide technical guidance to plan auditors; (4) imposing penalties for deficient audits; and (5) referring significantly deficient professional audit work to the AICPA and State licensing authorities for disciplinary action. Since small CPA firms often have little ERISA expertise, technical assistance will be particularly focused on these entities. As the redesigned Form 5500 employee benefit plan annual filing is implemented, users will need additional help in becoming familiar with the new form to avoid an increased error rate.

Promoting the formal voluntary compliance program through which fiduciaries who have found problems with their plans can seek assistance and/or approval in taking corrective action. This will particularly benefit small employers who otherwise might not take the corrective actions necessary to come into compliance.

Continuing to develop and refine compliance guides for our customer service staff in PWBA field offices to assist them in handling inquiries and ensure that American workers and their families receive the important protections afforded under HIPAA and other recently enacted health care laws.

Provide individual technical assistance to target audiences (employers, unions, fiduciaries, accountants, actuaries, attorneys, third-party administrators, workers and their dependents).

Educate the pension and welfare benefits community as to the problem areas that we have uncovered in our investigations and the standards for compliance with ERISA.

Providing a prompt and courteous response to all benefit complaints filed with us and, when requested, furnish the complainant with an understandable explanation of the outcome of our review and investigation.

Enforcement

Finally, PWBA will pro-actively enforce existing and future regulations as a means for deterring and correcting violation f the ERISA Statute. Strategies include:

Enforcing the new health care provisions contained in the new part 7 of ERISA, particularly HIPAA, Newborns’ and Mothers’ Health Protection Act of 1996, Mental Health Parity Act of 1996, the Women’s Health and Cancer Rights Act of 1998, and anticipated new health care reform legislation. The ongoing responsibilities of PWBA in this area include developing comprehensive regulations, interpretive bulletins, opinions, rulings, and model forms and providing training, technical assistance and other guidance at the State and federal level to facilitate compliance with and enforcement of the health care portability, non-discrimination and other provisions of Title I of ERISA relating to group health plans. In satisfying these responsibilities PWBA coordinates closely with the Department of the Treasury and the Department of Health and Human Services through an ongoing interagency working group.

Refining our investigative aid to assist investigators in reviews of health plans to determine whether there is compliance with the new health care laws. PWBA investigators are currently implementing a nationwide enforcement pilot project to test the investigative aid and how it can best be used in future investigations of health plans to ensure that workers and their families are not unjustly denied any protections provided under HIPAA and other related health care provisions.

Continuing to target and investigate pension plan violations where participants are susceptible to actual loss of benefits, or “populations” of plan participants who are potentially exposed to the greatest risk of falling victim to unlawful conduct.

Identifying civil violations and achieving appropriate correction in the least obtrusive and most cost-effective manner.

Strategical targeting and conducting investigating when meaningful monetary or injunctive relief can be obtained. When alternative methods are available to prevent, redress, or punish violative behavior, in general, preference will be given to options which will result in the most timely remedial action and the most efficient use of agency resources.

Referring evidence of criminal activity, whether or not pursued by PWBA, to the appropriate United States Attorney’s office or to the appropriate state’s attorney’s office.

Correcting abusive practices by service providers and financial institutions who offer a variety of administrative, financial, consulting, and other types of services to employee benefit plans enabling PWBA to leverage its enforcement resources.

Continuing to be alert for new and emerging threats to employee benefit plans and plan participants.

PWBA Performance Goals:

Strategies to Achieve Strategic Goals

Implement a new processing system outside the IRS for Form 5500 Annual Reports and promote the electronic filing of the annual reports to further streamline the system and reduce the cost and burden of filing, as well as the cost of operating the system. The reports are filed annually by employee benefit plans to provide information about plan operations to plan participants and the regulatory agencies. The new system will streamline the process for converting Form 5500 data into electronic format and yield more accurate and timely data for enforcement targeting, public disclosure, research and policy development.

Increase compliance of benefit plan filings and related audits by (1) educating filers through establishing a filer Help Desk; (2) refining computerized edit tests and corrective correspondence; (3) expanding outreach with the AICPA and State CPA societies to educate and provide technical guidance to plan auditors; (4) imposing penalties for deficient audits; and (5) referring significantly deficient professional audit work to the AICPA and State licensing authorities for disciplinary action. Since small CPA firms often have little ERISA expertise, technical assistance will be particularly focused on these entities. As the redesigned Form 5500 employee benefit plan annual filing is implemented, users will need additional help in becoming familiar with the new form to avoid an increased error rate.

Provide individual technical assistance to target audiences (employers, unions, fiduciaries, accountants, actuaries, attorneys, third-party administrators, workers and their dependents) by participating in conferences, symposia and programs designed to expand an understanding of ERISA’s compliance requirements.

Promote a formal program through which fiduciaries who have found problems with their pension plans and benefits can seek assistance and/or approval in taking corrective action. Voluntary compliance by fiduciaries protects participants and beneficiaries by making early corrections. It is also an efficient supplement to resource intensive enforcement actions.

Implement the ERISA-related provisions of managed health care legislation which protects participants against discrimination based on health status, as well as additional health protections provided under the provisions of the Newborns’ and Mothers’ Health Protection Act of 1996.

Follow up on initial managed health care related compliance guidance by issuing a broader set of guidance to ensure that laws related to managed health care can be smoothly implemented without inducing major disruptions in the operations of plans or loss of coverage if employers exit the voluntary system in the face of uncertainty or the perception of high prospective costs.

Provide an appropriate, responsive and cost- effective regulatory framework and interpretive guidelines for private-sector employee benefit plans which minimizes regulatory and administrative burdens with respect to the statutory and regulatory requirements.

Process exemption requests under Title I of ERISA in a timely manner, establishing effective conditions and safeguards to protect plans, participants and beneficiaries and facilitating meritorious transactions that would otherwise be prohibited.

PWBA Performance Goals:

Strategies to Achieve Strategic Goals

Assisting workers and conducting outreach and education activities are perhaps the most ubiquitous of activities yet are an integral part of achieving PWBA’s mission in a cost effective manner. The tangible outcome results, however, are the most difficult to measure. Nevertheless, PWBA strongly advocates that meaningful education, outreach, and assistance result in positive dividends in the form of increased voluntary compliance, less violations, and a more informed public able to protect its earned benefits. Some of the strategies utilized include:

Continuing to implement a new health education campaign to (1) raise public awareness about the role of PWBA in overseeing employer provided health benefits, (2) educate workers and their employers about health plans, (3) provide individual technical assistance to workers who have questions about their health benefits or need assistance in obtaining those benefits, and (4) provide information to employers and plan sponsors about their responsibilities under the law.

Promoting greater rates of retirement savings by encouraging individuals to begin saving at a younger age; improving individuals’ understanding of their savings options (including the value and importance of keeping existing defined benefits pension plans), the consequences of their choices, and sources of information and assistance; encouraging businesses, especially smaller companies, to provide greater educational services to their employees; elevating the need to save for retirement on the nation’s list of concerns and priorities; and undertaking initiatives to raise public awareness about what is needed to ensure long-term personal financial independence.

Maintaining the federal-state-local partnership to educate employee benefit plan participants who are at risk (namely, dislocated workers who face job loss and associated benefits losses) in understanding not only their rights under ERISA, COBRA, HIPAA, etc. but also how their employment status may affect their pension and health benefits. We work with the state Dislocated Worker Units which are funded by ETA under JTPA, Title III.

Providing individualized participant assistance (information concerning their rights, help in seeking benefits or an explanation of why they are not entitled to benefits, an explanation of how the law applies and, in appropriate cases, make inquiries on their behalf).

Providing a prompt and courteous response to all benefit complaints filed with us and, when requested, furnish the complainant with an understandable explanation of the outcome or our review and investigation.

PWBA Performance Goal:

Strategies to Achieve Strategic Goals

Promote greater rates of retirement savings particularly for women and minorities by encouraging individuals to begin saving at a younger age; improving individuals’ understanding of their savings options (including the value and importance of keeping existing defined benefits pension plans), the consequences of their choices, and sources of information and assistance; in partnership with the SBA, encourage smaller companies to provide retirement benefits to their employees; elevating the need to save for retirement on the nation’s list of concerns and priorities; and undertaking initiatives to raise public awareness about what is needed to ensure long-term personal financial independence.

Seek to help simplify pension and health care laws and reduce paperwork by providing analysis and technical assistance to all parties involved in the legislative process.

Develop and work with Congress to increase public awareness of basic pension and retirement planning issues, including the importance of personal savings, and general information on pension investing.

Conduct research and policy analysis required to address emerging policy, legislative and operational issues; evaluate the impact of new types of pension plans for small firms; and expand research on employee health benefit plans’ structural, operational, and medical quality.

Develop new sources of data on ERISA covered employee benefit plans and conduct research and policy analysis required to address emerging policy, legislative and operational issues, including new types of pension plans for small firms and quality of employee health benefits.

Key External Factors that May Affect Achievement of Performance Goals

­

• Structure/health of economy
  • composition/level of employment
  • economic growth
  • sectoral shifts in economic activity

­

• Demographics
  • aging population
  • increasing representation of women and minorities in workforce
  • increasing percentage of workers in small businesses

• Evolution in the types of employee benefit plan sponsors. (Different types necessitate different approaches and strategies to accomplish the goals).
  
• Evolution of the health care services industry. (Changes in financial arrangements between plan sponsors and providers create new issues that need to be addressed to achieve the goals. Similarly, medical cost inflation can cause employers to drop or restrict health coverage and also to pass more of the cost on to participants.)
  
• Increased prevalence of self-insured health plans. (Preemption of state law by ERISA brings all aspects of health benefits regulations within PWBA’s jurisdiction.)
  
• Evolution and volatility of financial market. (New financial products require us to address different ERISA issues. The numbers and types of compliance issues increase with market volatility.)

• Increase in number of regulated entities. (Many components of workload are proportional to regulated universe.)
• Financial status of ERISA pension plan sponsors. (The number and types of compliance issues are directly related to plan funding levels.)

PWBA’s annual performance goals are directly related to the accomplishment of the overall goals and objectives established in the 5-year, PWBA’s strategic plan. The annual performance plan outlines the measures we intend to take as we move toward accomplishing the Secretary’s goal, and our primary mission, of protecting the pension, health and other welfare benefits of the over 150 million people.

PWBA has, for some time, maintained performance measurement systems to provide the Department, the administration, Congress and the regulated community with information on which to assess our program management’s efforts to protect the integrity of America’s employee benefit plans.

The Government Performance and Results Act of 1993 (GPRA) contemplates performance measures in the form of output, outcome, and impact. While outputs (e.g., booklets and guides published, opinions, exemptions and regulations issued, and investigations conducted) can be measured, their individual outcomes may vary substantially in complexity, significance, and precedential value. An increase or decrease in outputs, therefore, will mean little by itself without a substantive assessment of the mix of outcomes.

A desirable outcome in our participant assistance, public outreach, other compliance assistance, interpretive, exemptions, regulatory and enforcement programs is improved compliance with ERISA’s requirements by plan sponsors, fiduciaries, service providers and other members of the regulated community. Therefore, improved compliance is supported by: (1) providing timely and concise interpretive, regulatory and exemption activities which clarify the statutory and regulatory requirements; (2) removing or reducing unnecessary impediments and burdens which impede the establishment and maintenance of employee benefit plans, while ensuring the protection of participant benefits; (3) maintaining responsive and responsible voluntary compliance and enforcement programs; and (4) educating participants and beneficiaries by the development of materials and provision of services designed to assist participants in understanding their rights and protecting their benefits.

Direct measure of improved compliance is complicated by the absence of an established base level of non-compliance with ERISA. Moreover, we do not believe such a base level can reasonably be ascertained. With over 700,000 pension plans and four million welfare plans, PWBA does not believe it is economically practical to develop a statistically valid sample of the employee benefit plan universe for the purpose of establishing a reliable non-compliance baseline against which outcomes and impacts in the form of improved compliance may be measured. PWBA believes that compliance improvements are necessarily achieved, albeit not measurable, through the timely and meaningful discharge of our participant education, opinion, exemption, regulatory and enforcement programs. The performance measures set forth above, therefore, generally focus on the timeliness and efficiency, substance and quality of outputs, rather than merely on the number of such outputs.

Nevertheless, the strategic plan DOES include some key performance measures that are true outcomes, namely: (1) increasing the number of people with pension coverage particularly women, minorities, and workers of small businesses and (2) increasing the restoration of mis-appropriated pension plan assets.

Stakeholders are those with an interest in the efficiency of the operation or the success of the agency in delivering intended results and maintaining the viability of the program. Included are customers, program managers and staff, members of Congress and staff of relevant committees, federal and non-federal entities potentially affected by or interested in the strategic plan, the Office of Management and Budget, the Office of Personnel Management, the General Accounting Office, the Labor Department's Office of the Inspector General, the Labor Department's Chief Financial Officer, agency employees, and ultimately, the American people. The agency considers each of its stakeholders to be important within the scheme of its regulatory activities and tries to consider the impact on each when developing policy.

PWBA has a long history of proactively interacting with representatives of the pension, health and welfare benefits community as a means for balancing and being responsive to the competing interests.

One such stakeholder that facilitates PWBA reaching out into a number of constituency groups is the Advisory Council on Employee Welfare and Pension Benefit Plans which is a cross cutting group of various stakeholders. The Council consists of 15 members appointed by the Secretary of Labor: three representatives of employee organizations (at least one of whom represents an organization whose members are participants in a multi employer plan; three representatives of employers (at least one of whom represents employers maintaining or contributing to multi employer plans); one representative each from the fields of insurance, corporate trust, actuarial counseling, investment counseling, investment management, and accounting; and three representatives of the general public (one of whom represents those receiving benefits from a pension plan).

Second, PWBA has a very active education and outreach campaign as well as an interactive approach in engaging or making itself available to the regulated community (symposia, conferences, professional associations, etc). These forums provide a plethora of insight to its policies and related impacts on the regulated community.

Third, in addition to its programmatic interaction with stakeholders in conducting the day-to-day business of the Agency, PWBA seeks input from and provides its Strategic Plan to other Federal agencies with shared ERISA responsibilities (e.g. , DOL’s Pension Benefit Guaranty Corporation and Internal Revenue Service). Different provisions of ERISA governing the operation of employee benefit plans are administered by PWBA (Title I) and the IRS (Title II). Title III of ERISA contains sections relating to the administration of ERISA, including provisions for coordination between PWBA and the IRS. PBGC administers a pension insurance system covering defined benefit pension plans under Title IV of ERISA.

Finally, we will be providing copies of our Strategic Plan to the Office of the Solicitor, the Department of Justice, and the Office of the Inspector General.

Summarized below are the major stakeholders and their respective interests.

In carrying out the Department’s ERISA and Federal Employees’ Retirement System Act of 1986 (FERSA) responsibilities, DOL coordinates its enforcement, policy, regulatory and public information programs with numerous Federal, state and local entities.

Under ERISA, the PWBA shares responsibility with the Internal Revenue Service and the Pension Benefit Guaranty Corporation. Additionally, our enforcement responsibilities require coordination with financial institution regulatory agencies such as: Comptroller of the Currency, Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Securities Exchange Commission, State insurance and financial regulatory entities, as well as the FBI, OIG, US Postal Service and state and local law enforcement agencies.

In order to fulfill the Department’s policy, research, regulatory and public education responsibilities, in addition to the above, PWBA works with the Departments of Health and Human Services (HHS) the U.S. Treasury, the National Economic Council, the Bureau of the Census, the Bureau of Labor Statistics, the Thrift Savings Board, and the Small Business Administration (SBA).

Specific examples include our on-going initiative with the SBA to expand pension coverage for women, minorities and small businesses; our ongoing coordination with HHS and Treasury on health care policy and regulations; our pension education initiatives, and our coordinated enforcement approach where PWBA works with Federal, State and/or local law enforcement agencies.

Other DOL cross-cuts includes a pilot project in which a DOL compliance assistance team composed of ESA, MSHA, OSBP, OSHA, PWBA, and SOL staff work with the host Small Business Development Center, Manufacturing Partnership Center and/ or Agricultural Center to provide information and training to developing, new, and established small businesses. In addition, PWBA will coordinate with ETA to support the education and assistance to dislocated workers on pension and health issues

As part of the Department’s Women Achieving Parity initiative, PWBA assumes a leadership role in support of a coordinated outreach effort to women on financial issues, especially those relating to a secure retirement. PWBA, via its Retirement Savings Education Campaign, will work with the Women’s Bureau and other DOL Agencies in an on-going outreach effort to educate women about retirement savings. The coordinated outreach will include finding new ways to inform women and will continue to raise the consciousness of women and the press to focus on general retirement issues as well as those unique from a woman’s perspective.

HIPAA requires the Secretaries of Labor, the Treasury, and Health and Human Services to ensure, through a memorandum of understanding (MOU), that regulations, rulings and interpretations issued that relate to the same matter over which two or more of the Secretaries have responsibility are administered so as to have the same effect at all times; and enforcement policies are coordinated in order to have a strategy that avoids duplication of enforcement efforts and assigns enforcement priorities.

PWBA has worked with representatives of the Treasury and Health and Human Services to execute an MOU. The MOU codifies the current practices that have developed among the three Departments while working on HIPAA, the Mental Health Parity Act of 1996, the Newborns’ and Mothers’ Health Protection Act of 1996, and the Women’s Health and Cancer Rights Act of 1998. These health care statutes create shared jurisdiction and shared regulatory responsibility for the three Departments and the Departments formed an interagency working group to develop regulations under these provisions.

An MOU is needed because under HIPAA there is some overlap with regard to the jurisdiction of the three Departments. For example, many of the same portability, access and renewability requirements (e.g. the certification requirement) apply to group health plans as well as health insurance issuers such as insurance companies and HMOs.

Under HIPAA, DOL enforces these requirements against group health plans, HHS enforces them against health insurance issuers and the civil penalties for violating the requirements are administered through the Internal Revenue Code.

In the international arena, PWBA provides assistance to ILAB, the World Bank, AID and foreign governments. We have provided seminars and technical assistance regarding retirement security issues to visiting officials from many countries. This includes technical assistance regarding establishing private pension systems, developing policy, establishing legal structures to control the systems, and creating and operating regulatory institutions.

PWBA management recognizes that on- going program evaluation is beneficial to ensuring that (1) programs achieve their intended results, (2) resources are used consistent with Agency mission, and in an effective and efficient manner, and (3) reliable and timely information is available to program managers to ensure sound decision making.

PWBA has adopted various methods of ensuring its programmatic goals are met while concomitantly ensuring the most effective and efficient use of its limited resources. PWBA uses an integrated approach of checks and balances drawing from numerous sources of information such as, (1) management judgement and knowledge gained from daily operations, (2) on-going management reviews, (3) external reports and/or audits (IG, GAO, OMB, etc.), (4) information from other existing financial and non-financial audit systems, (6) reports of Congressional Committees and (7) feedback from its stakeholders. In addition, PWBA continues to pro-actively integrate its strategic planning process into its budget formulation as envisioned by GPRA.

With respect to internal program review, on an ongoing basis, PWBA staff analyze and evaluate program policies, procedures and results, and recommend options for improvement. We analyze annual performance results against annual performance plans and adjust our goals and strategies based on the analysis of the data. As needed, we update our management information systems to capture the most meaningful data available for targeting and other management planning purposes. In addition, investigative case reviews are held on a regular basis throughout the year with the Office of the Solicitor. Finally, quarterly management meetings are utilized to ensure consistency of approach and to further brainstorm initiatives and implementation issues.

The Office of Enforcement utilizes a multi- faceted approach to conducting on-going program evaluation of its investigative activities and initiatives. For example, investigations resulting in monetary recoveries are, among other things, reviewed for completeness, accuracy, appropriateness of corrective action, and compliance with Agency policy.

National and Regional enforcement initiatives are assigned lead personnel to manage the day-to-day activities and to monitor goal attainment. As part of this on- going evaluation process, special, ad hoc evaluations are performed, as necessary. Regional offices report to the national office on a quarterly basis with regard to the status of national initiatives. Finally, Regional management conducts self evaluations on a random sample of cases at least once a year.

In essence, PWBA’s approach is to use practical, proactive, day-to-day management in a manner that results in, taken as a whole, (1) a comprehensive review of program activities, (2) a system of checks and balances that ensures the effective use of limited resources, (3) the production of useful and meaningful information in which to make future decisions, and (4) minimizes the use of limited resources for such oversight activity.

Externally, PWBA also utilizes its stakeholders to supplement its internal review processes. For example, we consult with the PWBA ERISA Advisory Council on policy matters that affect the employee benefits community. The full Council meets a minimum of four times a year and take up a number of issues that provide valuable feedback to the program. The working groups meet, on average, twice a month.

In order to assess customer satisfaction, we receive customer feedback on a regular basis through our participation in customer- sponsored conferences and symposia as well as more structured annual customer satisfaction surveys.

We continuously modify our already extensive employee training program to accommodate PWBA participant feedback, as well as to address legislative, policy and operational changes and/or amendments to ERISA.

As we continue the integration of budget, Strategic Planning and program evaluation, we will continue to review and revise our strategies to be as responsive to and protective of the employee benefit community as resources will permit.

Prospectively, we are considering focus groups and a participant knowledge survey to help us more efficiently direct our participant education activities toward areas that need the most attention. Again, we believe an educated and informed public will result in more compliance and early detection of fraudulent behavior.

Finally, PWBA is exploring via additional funding requests and reallocation of existing resources, systems that will more formally evaluate our existing programs and new initiatives with an eye towards developing on-going, systematize, program evaluation as envisioned by GPRA.

PWBA’s information technology infrastructure and related data systems are aligned to support the various program offices in carrying out their respective responsibilities under ERISA and in accomplishing the Secretary’s goal of enhancing pension and health benefits security for over 150 million people.

PWBA fully supports DOL’s information technology goals. PWBA’s efforts in the technology area are intended to assist the agency in carrying out its mandate in the most efficient and effective manner possible by providing a secure ADP operating environment which protects hardware and software investments and database information which has been compiled to support initiatives aimed at protecting the integrity of the employee benefit plan system.

PWBA recognizes that data capacity consists of three integral components: (1) availability, (2) validity, and (3) timeliness.

Availability

PWBA has many performance measurement systems in place that provide reliable data that are used to establish baseline performance, evaluate current performance, and establish goals for future performance. Below are a few of the respective systems that support our strategic planning process:

• Enforcement Management System
• Office of Exemption Determinations Case Tracking System
• Office of Policy and Legislative Analysis Tracking System
• Office of Public Services Public Disclosure and Technical Assistance and Inquiries Tracking Systems
• Office of Chief Accountant Tracking System
• Office of Regulations and Interpretations Case Tracking System
• Office of Policy and Research Case Tracking System

As demonstrated by the various systems, PWBA has an abundance of available data with which to analyze, track, and report performance measures.

Validation

PWBA takes seriously the integrity of its respective data systems and addresses validation through a variety of mechanisms including managerial knowledge of day to day operations, case reviews, internal audits, performance goal tracking, program and evaluation. Moreover, PWBA continues to strive for improvement to ensure adequate internal controls.

In a continuing effort to improve our strategic planning process, PWBA is currently engaged, in partnership with the Department, with outside experts in performance measures and data validation. We believe that continuing to push the envelope in this area will result in more meaningful and useful data to our program managers.

Timeliness

In general, the vast majority of data utilized in tracking performance goals is timely. However, PWBA is aware that some indicators may lag relevant to the GPRA reporting requirements due to uncontrollable, external data sources. In those instances, PWBA has thoroughly analyzed other data sources and determined that sacrificing a time-tested, valid, reliable indicator that measures a true outcome for a more timely data source that does not adequately measure the outcome is undesirable. Therefore, where a data source is untimely in those limited instances, PWBA attempts to clearly articulate the activities (outputs) that ultimately support the outcome goal. Moreover, in the course of the five year strategic plan, the data does provide a discernable trend (result) notwithstanding that the data in not timely available in any given annual performance year.

Major New System - EFAST (ERISA Filing Acceptance System)

Finally, PWBA continues to implement the new EFAST System. The Form 5500 series of reports are filed annually by employee benefit plans to provide information about plan operations to plan participants and the regulatory agencies, DOL, IRS, and PBGC. Since 1976 the forms have been processed in IRS service centers. IRS provides copies of the forms and data tapes to the agencies. This process typically took more than two years which greatly restricted the use of the data for enforcement and public disclosure.

In the last few years, the cost of processing the data to the agencies has been increasing. In these times of austere budgets, the agencies can no longer afford to fail to take advantage of existing technologies to capture cost savings.

During FY 2000, PWBA will implement a new electronic Form 5500 filing system which will relieve the Department’s reliance on the IRS. Concomitantly, the new system will save the government over $50 million during the five year life cycle of the system and will speed the availability and use of the data. The system will be developed and operated by a contractor.

The new processing system will greatly enhance electronic filing which will benefit employers by making it easier and less expensive for them to meet their filing obligations. Enhanced electronic filing under the new system would also reduce the reporting burden on employers by including consistency and accuracy checks in the electronic filing software, thus producing better data faster as well as reducing employer exposure to possible civil penalties associated with deficient filings.

As a result, PWBA has included new results-based performance measures in its compliance Strategic Goal that will demonstrate some of our successes with the new EFAST system.

The Government Performance and Results Act demands a more focused, unified management approach to accomplish the goals established in the Department’s Strategic Plan. Therefore, PWBA has established an overarching strategic management focus to effectively link strategic planning, resource allocation and operational activities with program strategies and to improve services provided its customers.

One major challenge is to establish a process aimed at assuring PWBA’s performance and accountability for program results. To this end, PWBA operates under the auspices of the Departmental Management Review Council which oversees the Department’s Strategic and Annual Performance Plans and tracks specific Agency results. The Council also provides direction on the implementation of major activities and provides a forum for discussing substantive management issues.

As part of its overarching management focus, PWBA has also established long-term management initiatives to ensure coordination and support of Departmental cross-cutting functions such as financial (ensuring clean audit opinions), information technology (implementing cost effective, secure, IT architecture; providing internet access to the public for Agency specific materials; ensuring Y2K compliance), and human resource management (promoting life long learning and diversity; establishing PWBA as a quality workplace; providing a safe, healthful workplace).

Finally, PWBA maintains a pro-active management system that is responsive to audit recommendations identified by the GAO and Departmental OIG and takes the appropriate corrective action commensurate with the alleged deficiencies, if any. With respect to customer service, PWBA appreciates constructive feedback from its customers in how services might be better provided and strives to integrate it into its daily operations. As such, PWBA does, and continues to seek, the appropriate resources necessary to conduct customer surveys and other program evaluations to obtain this feedback at a reasonable cost.

PWBA’s Strategic Plan clearly demonstrates the agency’s commitment to protect the integrity of pensions, health plans, and other employee benefits for more than 150 million people. While a Strategic Plan is a means to and end and not an end unto itself, the plan presents a vision, the dynamic and ever- changing environment that we operate in, and the related Strategic and Outcome Goals that we strive to achieve. Moreover, the plan supports cross-cutting Departmental initiatives along with PWBA’s on-going enforcement, policy, regulatory and public information programs.

Summary of Performance Goals

Deter and Correct

Facilitate Compliance

Assist Workers

Encourage Growth