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Statement of Leslie B. Kramerich Acting Assistant Secretary for Pension and Welfare Benefits

Fiscal Year 2001 Request for the
Pension and Welfare Benefits Administration

Mr. Chairman and Members of the Committee:

I am pleased to appear before you to discuss the FY 2001 budget request for the Pension and Welfare Benefits Administration (PWBA ). As you know, PWBA is responsible for the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Our mission is to promote and protect the pension, health and other benefits of the over 150 million participants and beneficiaries in private sector employee benefit plans.


There are over 6 million private sector employee benefit plans which hold more than $4.3 trillion in assets. Private sector employee benefit plans provide income and other benefits on which the majority of our population relies to maintain an acceptable quality of life. The economic security of an individual or family is jeopardized if pension, health and other benefits are not paid as promised. For example, health benefit plans help to ensure that many individuals are able to obtain medical services that they would otherwise rarely be able to afford. When these plans fail to deliver, people may have no place to turn but to publicly funded programs. The continued increase in the plan universe and the number of people covered, the importance of pension assets to our capital markets coupled with the proliferation of new benefit arrangements, such as hybrid plans, and the opportunities they present for fraud have, over the years, greatly expanded our responsibilities in terms of scope and complexity. Safeguarding and promoting the benefits security of American workers and their families is an enormous challenge for all of us, but one we face with a strong resolve to succeed and growing sense of pride in our results thus far.


I am pleased to report to you today, Mr. Chairman, that PWBA 's return on the taxpayers' investment continues to be significant. In this regard, I'd like to tell you about just a few of PWBA 's most recent accomplishments in helping to build a more secure workforce. For more information, please refer to PWBA 's Annual Performance Plan.

  • In FY 1999, PWBA corrected civil violations, either through voluntary compliance or litigation, resulting in monetary recoveries to employee benefit plans of nearly $492 million and 4,061 cases closed. PWBA 's enforcement actions in criminal cases resulted in the restoration of over $2.5 million to plans, 135 criminal cases closed, and the indictment of 81 persons for fraudulent behavior related to employee benefit plans. At the recommendation of the Office of Inspector General, PWBA also began recording the number of investigations that resulted in plan assets protected in FY 1999. These actions involved 51 cases with $27 million worth of plan assets protected.
  • As part of its enforcement strategy, PWBA has designated certain areas of special emphasis, including the Employee Contribution Project (ECP), designed to curb and prevent abuse in 401(k) and health plans (both self-funded and insured). This ongoing project was initiated in early 1995. From the inception of this project through the end of February 2000, PWBA has opened a total of 4,663 401(k) investigations and recovered $75.7 million for 401(k) plan participants. We have also opened 438 health plan employee contribution cases and recovered $18.4 million. Included in these numbers are 151 criminal 401(k) investigations, resulting in the criminal prosecution of 88 persons. This project has helped to focus the attention of the American public on their role in ensuring their retirement security. Another $4.8 million has been restored to plans through the voluntary Pension Payback Program.
  • In FY 1999, our customer service staff responded to approximately 155,000 inquiries and recovered $62 million in individual benefits for participants who were involved in benefit disputes. In addition to our customer service staff results, another $12 million was recovered for participants as a result of investigations.
  • On December 16, 1998, the Secretary of Labor launched PWBA 's new Health Benefits Education Campaign patterned after its very successful Retirement Savings Education Campaign. The campaign will help educate the 125 million Americans who participate in job-sponsored health plans about their health benefit rights, and alert them to situations at home and at work that may require a change in health care benefits. Thus far, more than 70 agencies and organizations have agreed to partner with us in the campaign and additional groups have indicated an interest in joining this effort.
  • In FY 1999, PWBA also published 16 new or revised brochures and pamphlets and distributed over 630,000 copies of our publications via PWBA field offices and our toll-free publications hotline contractor (1-800-998-7542). Also, over 46,000 users accessed our website each month. In addition, PWBA produced a marketing package that was distributed to the top 50 regional and national consumer reporters, a documentary, and website materials to promote the 25th anniversary of ERISA.
  • As a result of the health laws enacted since 1996, we have developed 14 interim final regulations implementing the major portions of the Health Insurance Portability and Accountability Act (HIPAA), the provisions of the Mental Health Parity Act, and the provisions of the Newborns' and Mothers' Health Protection Act. In addition, to finalizing these interim regulations, we are also working on developing interim final regulations on the provisions of the Women's Health and Cancer Rights Act and additional guidance on HIPAA's non-discrimination provisions.
  • We led a multi-agency effort with the Internal Revenue Service (IRS), the Pension Benefit Guaranty Corporation (PBGC) and the Social Security Administration to develop requirements for the new Form 5500 ERISA Filing Acceptance System (EFAST) in order to speed the availability and use of plan information. Once again, Mr. Chairman, we would like to thank this Committee for its support over the past several years in providing additional resources to PWBA for the development and implementation of this new reports processing system.
  • And finally, we developed a revised Form 5500 Series Annual Report, in cooperation with the IRS and PBGC, that is designed to streamline and facilitate compliance with ERISA's annual reporting requirements. The revised form is being implemented this year in conjunction with EFAST for the plan year 1999 filings. We understand that some filers may need additional time and/or flexibility to make a successful transition to the new forms. Accordingly, after consulting with the IRS and the PBGC, we have determined that it is appropriate to grant one-time transition relief for certain eligible filers. As soon as the specifics of the extension have been worked out, we will issue a written public announcement regarding this relief and will post it on the Department's website dedicated to EFAST issues. We expect to resolve these issues next week. We are also publishing guidance for filers who have asked for permission to use certain non-standard formats when filing their 1999 computer scannable Form 5500 series reports.


As the Secretary testified earlier, the Department has established three strategic goals which connect the Department's many agencies and programs that serve the common purpose of helping America's workers meet the challenges they face today and in the future. PWBA 's program falls under the Department's second strategic goal: A Secure Workforce. To accomplish this goal, PWBA established four agency goals:

1. Deter and correct civil violations of the relevant statutes. PWBA deters and corrects violations of the relevant statutes of ERISA by identifying civil violations and achieving appropriate correction a cost-effective manner (i.e. voluntary compliance, administrative proceedings or federal court action); detecting, investigating and referring criminal violations to prosecutorial authorities; ensuring that annual reports are filed timely and accurately; and ensuring that audits of employee benefit plans comply with professional standards.

2. Facilitate compliance by plan sponsors, plan officials, service providers and other members of the regulated community. PWBA facilitates compliance through the timely issuance of advisory opinions, exemptions, regulations, compliance guides and other issuances designed to assist the regulated community in understanding and complying with their responsibilities under the law, while removing unnecessary impediments and protecting the rights and benefits of participants and beneficiaries. These efforts are supplemented by PWBA participation in conferences, symposia, and programs designed to expand an understanding of ERISA's compliance requirements.

3. Assist workers in understanding their rights and protecting their benefits. PWBA assists workers in understanding their rights and protecting their benefits by disclosing plan documents; developing publications, news releases, and other educational materials which inform participants of their rights under Federal law; assisting in the development of amicus curiae briefs to further participant rights and benefits; and maintaining a nationwide participant assistance program for providing written and telephone responses to participant problems and inquiries.

4. Encourage the growth of employment-based benefits. As one of the principal agencies with responsibility in the area of pension, health care and other employee benefits, PWBA plays a leadership role in the development of retirement, health care and employment policy. PWBA discharges its responsibilities in this area in a variety of forms including, but not limited to, maintaining an active research program; continuing its educational outreach efforts to help plan sponsors and participants understand their rights and obligations, as well as the importance of and options for retirement savings and health care benefits; assisting the Administration, other Federal agencies (e.g. Departments of Treasury and Health and Human Services, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation, among others) and Congress in the development and/or review of legislative initiatives affecting employee benefits.


To accomplish these goals, we will continue to analyze and evaluate our program policies, procedures and results, and develop new options for improving our performance in protecting the pension, health and other benefits of plan participants and their beneficiaries. Additional resources, however, will be needed to effectively administer our growing responsibilities. PWBA 's fiscal year 2001 budget request will assist the agency in attaining its agency goals and furthering two of the Department's outcome goals -- "Increase Compliance with Worker Protection Laws" and "Protect Worker Benefits".

PWBA 's budget request provides for a total of $107,832,000 and 850 FTE and, in conjunction with its annual performance plan, reflects the agency's program priorities for FY 2001. Included in this request are program increases, presented below in three categories, totaling $9,952,000 and 27 FTE. Over 42%, or $4,229,000, of the total increase is related to five one-time enhancements.

1. Pension Security. PWBA is requesting an additional $3,119,000 and 15 FTE to: (1) respond in an expedited manner to protect the rights and benefits of plan participants when the plan sponsor faces severe financial hardship or bankruptcy and the assets of an employee benefit plan are in jeopardy; (2) expand its reporting compliance "help desk" operation established to assist filers of the newly revised Form 5500 Annual Report on employee benefit plans which will begin to be received by the Department this summer; (3) expand PWBA 's current enforcement program by supplementing its core investigative activities in response to the increased number of defined contribution pension plans, the increased number of workers covered by the pension plans, and the increase in the pension plan assets; (4) conduct the FY 2001 National Summit on Retirement Savings, as mandated by the SAVER law enacted in 1997, with a focus on examining the initiatives taken up by both the public and private sector, measuring the nation's progress since the 1998 Summit and further drawing the nation's attention to the importance of this issue; (5) expand its audits of the new TSP record keeping system which will become operational in October 2000; and (6) develop an Internet site to disclose images of the most recent Form 5500 Annual Reports for approximately 800,000 pension and health benefit plans, essentially turning every computer with Internet access into a public disclosure room.

2. Health Care. PWBA is requesting an additional $1,033,000 and 6 FTE to: (1) expand the agency's ability to provide compliance guidance, interpretations and analysis to plan sponsors and medical service providers regarding the recent health laws governing private sector employment-based health benefits; and (2) expand its current health benefits education campaign efforts to include new publications, multimedia educational products such as tutorial videos and an interactive web-site application, television, radio and print public service announcements, and news coverage.

3. Pension Security and Health Care. For both the health care and pension security areas, PWBA is requesting an additional $5,800,000 and 6 FTE to: (1) develop a technical design for the installation of the hardware and software components of the Form 5500 "help desk" operation; (2) manipulate and access the one million imaged filings of Form 5500 plan year 1999 filings from EFAST; (3) upgrade enforcement targeting and statistical databases to work compatibly with the planned LAN/WAN upgrades; (4) address the growth that has taken place in information technology requirements critical to supporting its enforcement, compliance, customer service, research, and education and outreach activities; (5) install an interactive toll-free line for all PWBA inquiries and provide additional staff in our field offices to handle the increase in the more complex, technical inquiries that are expected to flow into the agency upon implementation of the toll-free line; (6) expand its research program to include areas such as pension finances, employer decisions and health care quality; (7) enhance the agency's ability to conduct the kinds of economic impact analyses that must accompany agency regulatory actions; (8) design, develop and disseminate critical information to dislocated workers and others regarding their pension and health benefits; and (9) develop and print educational material on pension and health issues for distribution to employers and employees as part of the Department's pilot project involving the use of the Employment and Training Administrations's State Partnership One-Stop locations.


Mr. Chairman, we believe that this budget request reflects the strong commitment of this Administration, and this Congress, to improve the lives of America's working families by promoting their economic security. As I mentioned earlier, over 150 million participants and beneficiaries depend on us to protect their retirement, health and other benefits. The measure of our success relies heavily on our having the resources necessary to meet our growing responsibilities. We believe that our five-year strategic plan, annual performance plan and budget request for FY 2001 will help us accomplish our goals in an efficient and effective manner. This committee's support of our program has been, and will continue to be essential in this effort.

Mr. Chairman, this concludes my opening remarks. I appreciate this opportunity to appear before this committee and would be happy to respond to any questions you or other members of the committee may have.

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