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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921
Secretary of Labor Alexis M. Herman applauded Representatives
Christopher Shays (R-Ct.) and Donald Payne (D-N.J.) for introducing legislation
today that would give the Labor Department greater enforcement authority to
protect the $3.5 trillion held in private pension plans for American workers.
"One of my top priorities is to guarantee that all Americans enjoy a
secure pension when they retire. This bipartisan legislation will enable the
Labor Department to move more quickly against serious fraud and abuse that
jeopardizes workers' pensions," Herman said.
"We will continue to work closely with Congressmen Shays and Payne to
improve pension enforcement to make retirement security a reality for all
Americans," said Herman.
The legislation, called the Security and Enforcement Compliance for
Retirement under ERISA Act (SECURE Act), is virtually identical to the
Administration's proposal transmitted to Congress on June 10, 1997. The SECURE
Act would amend the Employee Retirement Income Security Act (ERISA) to:
- repeal the limited scope audit and require that plans of 100 or more
participants be subjected to a full audit by independent public accountants;
- require direct reporting by the plan administrator or accountants of
serious cases of fraud and abuse involving plan assets; and
- create new qualification standards for accountants who conduct ERISA
audits.
Note to Editors: A fact sheet explaining the provisions of the
SECURE Act is attached.
Fact Sheet
U.S. Department of Labor
July 29, 1997
Security and Enforcement Compliance for Retirement under ERISA Act
(SECURE)
The SECURE Act amends the Employee Retirement Income Security Act of
1974 (ERISA) and would:
- REPEAL LIMITED SCOPE AUDITS: ERISA currently permits plan
assets held in certain regulated financial institutions to be excluded from the
annual financial audit requirements for plans with 100 or more participants.
Auditors, however, may disclaim any opinion as to whether the financial
statements are fairly presented, even for assets not held by financial
institutions. Under the proposal, accountants would no longer be able to issue
audit reports that provide no assurance that plan assets are secure.
- PROVIDE QUALITY CONTROL REVIEWS FOR AUDITORS: This proposal
would require ERISA auditors to have an external quality control review and
satisfy continuing education requirements relating to ERISA plan audits.
Substandard auditors' reports were the basis for rejecting more than 1,800
annual reports over the past 2-1/2 years.
- REQUIRE DIRECT REPORTING OF EGREGIOUS VIOLATIONS: The audit
proposal would place new, faster reporting duties on auditors who are
terminated by an ERISA plan or who discover evidence of serious violations of
law or other irregularities. Auditors would provide notice directly to the
Pension and Welfare Benefits Administration only if they first notified the
plan administrator and the administrator failed to notify PWBA within a certain
time, unless the administrator is implicated. Under the bill, auditors would
have mainly "backup" reporting responsibilities: the primary reporting
obligation would remain with the plan administrator.
- CLARIFY THE ASSESSMENT OF CERTAIN FIDUCIARY PENALTIES: The
legislation also clarifies that section 206(d)(1) of ERISA does not preclude an
ERISA-covered pension plan from offsetting a participant's accrued benefits
against amounts owed to the plan due to the participant's breach of fiduciary
duty. It would also amend ERISA section 502(l) to provide the Secretary of
Labor with discretion to reduce the 20 percent penalty that otherwise applies
to amounts recovered after breaches of fiduciary duty. Without this change,
parties have a disincentive to voluntarily settle when the Secretary of Labor
finds violations because current law triggers the 20 percent penalty.
Archived News Release--Caution:
information may be out of date.
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