Pension Plans

In a May 1991 report (GAO/HRD-91-87), GAO revealed fund abuses in pension plans for which the Pension Benefit Guaranty Corporation (PBGC) had assumed responsibility. GAO indicated that both the Labor Department and the Internal Revenue Service may not have acted on information, found in annual reports filed by pension plans, describing violations involving asset use and funding deficiencies. This report follows up on that work and discusses (1) whether the agencies have identified and acted on the information and (2) what the agencies' current procedures and practices are for dealing with violations. Internal Revenue Service procedures generally are effective in identifying pension plans, including small ones, that report funding deficiencies and provide reasonable assurance that appropriate actions will be taken. The Labor Department's procedures ignore some small plans, despite indications that violations are more common among such plans.

GAO found that: (1) DOL did not take any enforcement actions against five small pension plans that reported apparent prohibited uses of funds, and could not ensure that it would act on similar future violations; (2) DOL database errors have resulted in unreliable data, and DOL cannot use those databases to adequately target plans; (3) the DOL enforcement targeting system automatically screens out a substantial number of small plans and focuses on only larger plans; (4) of the 11 plans GAO reviewed, 9 sponsors had corrected their funding deficiencies, or IRS had identified the deficiencies and taken appropriate corrective actions; and (5) current IRS procedures are adequate for correcting funding deficiencies reported by pension plans.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: