United States Government Accountability Office

GAO Report to the Ranking Minority 

Member, Committee on Health, 

Education, Labor and Pensions, U.S. 

Senate 

EMPLOYEE 

BENEFITS SECURITY 

ADMINISTRATION 

Enforcement 

Improvements Made 

but Additional Actions 

Could Further 

Enhance Pension Plan 

Oversight 

January 2007 

 

GAO-07-22 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2007

EMPLOYEE BENEFITS SECURITY 

ADMINISTRATION 

Enforcement Improvements Made but 

Additional Actions Could Further 

Enhance Pension Plan Oversight 

Highlights of GAO-07-22, a report to the 

Ranking Minority Member, Committee on 

Health, Education, Labor and Pensions, 

U.S. Senate 

In March 2002, we identified weaknesses in EBSA’s enforcement program, 

despite the agency’s actions to strengthen it. Since that time, EBSA has, 

among other things, promoted coordination among regional investigators 

and increased participation in its voluntary correction programs, as we 

recommended. EBSA also has recruited investigators with advanced skills in 

accounting, finance, banking, and law that officials believe are necessary due 

to ERISA’s technicalities. Yet some weaknesses identified in 2002 remain. 

Specifically, EBSA still has not adequately assessed the nature and extent of 

ERISA noncompliance, even though it has taken steps to do so. Without 

these data, EBSA is not positioned to focus its resources on key areas of 

noncompliance nor have adequate measurable performance goals to 

evaluate its impact on improving industry compliance. We also found that 

while some regional offices did routinely attempt to confer with their 

respective regional office of the SEC—the agency that oversees many of the 

same pension service providers under the securities laws—for case leads or 

to consider trends in potential pension violations, others did not. Lastly, 

EBSA’s overall attrition rates remain high, with many investigators leaving

for employment outside the federal government, yet EBSA has taken limited 

steps to evaluate the effect such attrition has on its operations. 

EBSA does not conduct routine compliance examinations and broad, 

ongoing risk assessments to focus its enforcement efforts like other 

agencies. Rather, investigators rely on various sources for case leads, such 

as participant complaints, agency referrals, and computer targeting. While 

such sources are important, this approach generally limits EBSA to leads 

discerned by participants and other government agencies or those disclosed 

by plan sponsors, and not those more complex or hidden. Further, EBSA 

also has not established a comprehensive risk assessment function. Instead 

of broad risk assessments, EBSA’s annual risk evaluations are generally

limited to a risk analysis of frontline investigators’ case loads. In contrast, in 

addition to such activities, IRS and SEC incorporate routine compliance 

programs in an attempt to detect violations and identify emerging trends that 

may warrant enforcement action. Also, the SEC and Pension Benefit 

Guaranty Corporation have dedicated staff to regularly analyze information 

from various sources, such as investigations and academic research. 

Certain statutory obstacles also limit EBSA’s oversight of private sector 

pension plans. First, restrictive legal requirements have limited EBSA’s 

ability to assess penalties against fiduciaries and can impede the restoration 

of plan assets. DOL officials said that the 502(l) penalty under ERISA 

discourages quick settlement and can reduce the amount of funds returned 

to pension plans. Second, EBSA investigators’ access to timely information 

necessary for identifying potential violations is limited by ERISA’s filing 

requirements. Even though EBSA is taking steps to address processing

delays, in 2006, investigators were relying on information up to 3 years old to 

target new case leads in some cases. 

The Department of Labor’s (DOL) 

Employee Benefits Security 

Administration (EBSA) enforces the 

Employee Retirement Income 

Security Act of 1974 (ERISA), which 

sets certain minimum standards for

private sector pension plans. On the 

basis of GAO’s prior work, the 

Senate Committee on Health, 

Education, Labor and Pensions 

asked GAO to review EBSA’s 

enforcement program. Specifically, 

this report assesses (1) the extent

to which EBSA has improved its 

compliance activities since 2002; (2) 

how EBSA’s enforcement practices 

compare to those of other agencies; 

and (3) what obstacles, if any, affect

ERISA enforcement. To do this, we 

reviewed EBSA’s enforcement 

strategy and operations, and 

interviewed officials at EBSA, the 

Internal Revenue Service (IRS) and

the Securities and Exchange

Commission (SEC), among others. 

What GAO Recommends

GAO recommends that EBSA 

evaluate its enforcement strategy in

light of other agencies’ strategies, 

determine how ERISA’s filing

deadlines affect its investigators, 

increase coordination with SEC, 

and determine how attrition affects 

its operations. EBSA disagreed with 

our recommendation to evaluate 

their strategy in light of other 

agencies’ strategies, but agreed with 

the remaining recommendations.

Congress should consider 

amending 502(l) of ERISA to give 

DOL greater discretion to waive the 

civil penalty, when appropriate. 

www.gao.gov/cgi-bin/getrpt?GAO-07-22.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barbara D. 

Bovbjerg at (202) 512-7215 or 

bovbjergb@gao.gov. 
Contents 

Letter 1

Results in Brief 2 

Background 5

EBSA Has Made Improvements to Its Enforcement Program, but 

Challenges Remain 12 

Unlike Other Agencies, EBSA Does Not Conduct Routine 

Compliance Examinations or Comprehensive Risk Assessments 21 

Statutory Obstacles May Limit EBSA’s Ability to Oversee Pension 

Plans Effectively 25 

Conclusions 28

Matter for Congressional Consideration 30 

Recommendations for Executive Action 30 

Agency Comments and Our Evaluation 30 

Appendix I Scope and Methodology 34 

Appendix II Comparison of Selected Federal Agencies’ 

Authorities, Enforcement Practices, Results, 

and Resources 37 

Appendix III Comments from Employee Benefits Security 

Administration 40 

Appendix IV Comments from Securities and Exchange 

Commission 46 

Appendix V GAO Contacts and Acknowledgments 47 

Related GAO Products 48 

Page i GAO-07-22 Employee Benefits Security Administration
Tables 

Table 1: Ratio of Investigators, Examiners, or Agents to Regulated 

Employee Benefit Plans and Securities Entities 10 

Table 2: Number of Pension Plans EBSA Reviewed in Fiscal Year 

2005 11

Table 3: EBSA Actions Taken in Response to GAO 

Recommendations from 2002 Review 13 

Table 4: Overall Attrition Rates (Percentages) for EBSA 

Investigators, Other EBSA Employees, DOL, and Other 

Federal Agencies, Fiscal Years 2001-2005 20 

Figures 

Figure 1: Participants in Defined Benefit and Defined Contribution 

Plans, 1980-2002 6 

Figure 2: Overview of EBSA’s Investigative Process 8 

Page ii GAO-07-22 Employee Benefits Security Administration
Abbreviations: 

CPDF Central Personnel Data File 

DFVC Delinquent Filer Voluntary Compliance 

DOL Department of Labor 

EBSA Employee Benefits Security Administration 

EDS ERISA Data System 

EFAST ERISA Filing Acceptance System 

ERISA Employee Retirement Income Security Act 

FTE full-time equivalent 

IRS Internal Revenue Service 

OCIE Office of Compliance Inspections and Examinations 

OIG Office of Inspector General 

OPM Office of Personnel Management 

ORA Office of Risk Assessment 

PBGC Pension Benefit Guaranty Corporation 

SCEP Student Career Experience Program 

SEC Securities and Exchange Commission 

STEP Student Temporary Employment Program 

VFCP Voluntary Fiduciary Correction Program 

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Page iii GAO-07-22 Employee Benefits Security Administration
United States Government Accountability Office

Washington, DC 20548 

January 18, 2007 

The Honorable Michael B. Enzi 

Ranking Minority Member 

Committee on Health, Education, Labor and Pensions 

United States Senate 

Pensions are a vital source of retirement income for millions of Americans. 

According to the Department of Labor (DOL), America’s private sector 

pension and retirement savings system includes approximately 

730,000 plans with assets totaling roughly $4.9 trillion and covering over 

100 million participants. The Department of Labor’s Employee Benefits 

Security Administration (EBSA) is the primary agency responsible for 

protecting private pension plan participants and beneficiaries from the 

abuse or theft of their pension assets by enforcing the Employee 

Retirement Income Security Act of 1974 (ERISA), as amended, which sets 

certain standards for pension plans sponsored by private sector 

employers. Because private sector pensions are second only to Social 

Security in providing individuals’ retirement income, effective oversight of 

the private pension industry’s management of these assets is critical to 

ensure the economic security of workers, retirees, and their families. 

In 2002, we reported on EBSA’s enforcement program and concluded that 

certain changes could improve the program’s management.1

 Subsequently, 

we testified before the committee that although EBSA had made progress

in improving its enforcement program, significant challenges remained.2

 In 

light of prior GAO work, you asked us to review the actions that EBSA has 

taken to strengthen its enforcement program. Specifically, this report 

assesses (1) the extent to which EBSA has improved its ability in recent 

years to enforce and promote compliance with ERISA, (2) how EBSA’s 

enforcement practices compare to those of other federal agencies with 

similar responsibilities, and (3) what obstacles, if any, affect EBSA’s 

enforcement of ERISA. 

 1

GAO, Pension and Welfare Benefits Administration: Opportunities Exist for Improving 

Management of the Enforcement Program, GAO-02-232 (Washington, D.C.: March 2002). 

2

GAO, Employee Benefits Security Administration: Improvements Have Been Made to 

Pension Enforcement Program but Significant Challenges Remain, GAO-05-784T 

(Washington, D.C.: June 9, 2005). 

Page 1 GAO-07-22 Employee Benefits Security Administration
To complete our work, we collected and documented information on 

EBSA’s enforcement strategy, operations, and human capital management 

practices. We reviewed EBSA’s efforts to address recommendations from 

our prior work, focusing on the agency’s management of its enforcement 

program. We interviewed officials from the Department of Labor’s Office 

of the Solicitor and Office of Inspector General as well as EBSA’s Office of 

Participant Assistance, Office of Enforcement, and the Office of the Chief 

Accountant. In addition, we visited 6 of EBSA’s 10 regional offices in 

Atlanta, Boston, Chicago, Kansas City, Philadelphia, and San Francisco, 

and 2 of its 5 district offices in Seattle and Washington, D.C., where we 

interviewed field office management, regional solicitors, investigators, and 

other staff. We selected these offices to represent a diverse selection of 

geographic locations and types of investigations conducted in those 

offices. To assess the reliability of EBSA’s enforcement results data, we 

spoke with agency officials about the data quality control procedures and 

reviewed relevant documentation. We determined the data were 

sufficiently reliable for the purposes of this report. We also interviewed 

officials and obtained information from the Internal Revenue Service (IRS) 

and the Securities and Exchange Commission (SEC) on the enforcement 

practices they use to regulate the pension and securities industries to 

determine whether these strategies or practices could be applicable to

EBSA’s enforcement program. We also collected information on the 

authorities and practices of the Pension Benefit Guaranty Corporation 

(PBGC), the agency responsible for insuring defined benefit pension plans. 

Finally, we met with representatives from professional organizations that 

represent plan participants and entities that conduct audits of pension 

plans that EBSA regulates. 

We conducted our work between October 2005 and August 2006 in 

accordance with generally accepted government auditing standards. 

Appendix I discusses our scope and methodology in further detail. 

In 2002, we reported that while EBSA had taken actions to strengthen its 

enforcement program, weaknesses existed in EBSA’s management of its 

enforcement strategy and overall human capital management policies, 

among other things, which limited its enforcement program’s 

effectiveness. Since that review, EBSA has made several improvements to 

enforce and promote compliance, in part by increasing coordination 

among its regional investigators, instituting better quality controls, and 

increasing the return of plan assets to participants through improved 

participation of plan sponsors in its voluntary correction programs. In 

addition, EBSA has recruited investigators with advanced skills in 

Results in Brief 

Page 2 GAO-07-22 Employee Benefits Security Administration
accounting, finance, banking, and law that EBSA officials believe are 

required because of the technical aspects of ERISA and the changing 

nature of benefit plans. Nevertheless, some weaknesses we identified in 

2002 remain. Specifically, EBSA has not developed complete data to 

adequately assess the nature and extent of noncompliance that would 

allow the agency to better focus its resources on areas of vulnerability, 

such as pension plan mismanagement. Without these data, EBSA also 

relies on performance measures that field investigators said encourage 

them to focus on the most obvious cases—those that are easily 

corrected—rather than on complex and emerging violations where the 

outcome is less certain. In addition, we found that while some regional

offices did routinely attempt to confer with their respective regional office

of the SEC—the agency that oversees many of the same pension service 

providers under the securities laws—for case leads or to consider trends 

in potential pension violations, others did not. Last, while EBSA has 

developed strategies regarding its workforce needs, the agency’s overall 

attrition rates remain high, and it has taken limited steps to evaluate the 

effect such attrition has on its operations. 

Unlike other federal enforcement agencies with similar responsibilities, 

EBSA does not conduct routine compliance examinations or broad risk 

assessments to inform its enforcement efforts. Regarding routine 

compliance examinations, EBSA officials said that such examinations 

would divert investigators from conducting investigations of alleged

violations. Instead, EBSA investigators rely on several sources, such as 

outside complaints and informal targeting of pension plans, to focus their

enforcement efforts. While these sources are important, such methods are 

generally reactive and may reveal only those violations that are sufficiently 

obvious for a plan participant to detect or those disclosed by plan 

sponsors in their pension plan documents, and not those violations that

are possibly more complex or hidden. In contrast, IRS and SEC have 

dedicated compliance examination programs designed to regularly inspect 

a company’s operations and financial records for violations and emerging

trends that may warrant further review by enforcement staff. EBSA also 

has not established a comprehensive risk assessment function to target 

enforcement. Instead of broad risk assessments, EBSA’s annual risk 

evaluations are generally limited to a risk analysis of frontline 

investigators’ case loads. Unlike EBSA, SEC and PBGC have dedicated

staff to routinely analyze data from a variety of sources in order to assess 

risk within the securities and pension industries in an attempt to better 

focus agency resources on areas of greatest risk. 

Page 3 GAO-07-22 Employee Benefits Security Administration
Certain statutory obstacles may limit EBSA’s oversight of private sector 

pensions. First, the restrictive legal requirements of the 502(l) penalty 

under ERISA—a civil penalty assessed against a fiduciary for certain 

breaches of ERISA—have limited EBSA’s ability to assess penalties and 

restore plan assets. According to EBSA officials, the penalty discourages 

parties from quickly settling claims of violations, thereby impeding the 

restoration of plan assets. Further, EBSA officials stated that, in some 

instances, the penalty reduces the amount of funds returned to pension

plans when a plan sponsor is unwilling or cannot fully restore assets and 

also pay the penalty. Second, while EBSA has taken steps to require the 

electronic submission and processing of pension plan data, EBSA 

investigators’ access to timely plan data for targeting new case leads is still 

limited by ERISA filing requirements and processing delays that are 

caused primarily by the existing paper-based system. As a result, in some 

cases, investigators were relying on data up to 3 years old to target 

potential violators. 

We are making several recommendations to the Department of Labor that 

are intended to strengthen EBSA’s enforcement program. We are also 

asking that Congress consider amending ERISA to give the Department of 

Labor greater discretion to waive the civil penalty assessed against 

fiduciaries or other persons who violate ERISA in instances where doing 

so will facilitate the restoration of plan assets. In response to our draft 

report, EBSA disagreed with our recommendation to evaluate the extent 

to which it could supplement its current enforcement practices with 

strategies used by similar enforcement agencies, such as conducting 

routine compliance examinations or dedicating staff for risk assessment. 

EBSA noted that because we did not evaluate the effectiveness of 

strategies used by the agencies highlighted in our report, they were 

concerned that a recommendation to copy one of the models would be 

premature given the diversion of investigative resources it would require. 

However, we do not suggest that EBSA copy the IRS, PBGC, or SEC 

models; rather, we suggest that EBSA consider incorporating enforcement 

strategies that are standard practice at these agencies as well as many 

other federal financial regulators. We recognize and would expect that 

EBSA’s implementation of these standard practices could vary from that of 

other regulatory models, given the nature of its responsibilities. EBSA 

agreed with our recommendations to conduct a formal review of the effect 

that ERISA’s filing deadlines have on its investigative staff; establish 

formal SEC coordination groups in its regional offices, where appropriate; 

and evaluate the factors affecting staff attrition and take appropriate steps 

as necessary. EBSA and SEC comments are reproduced in appendixes III 

and IV, respectively. 

Page 4 GAO-07-22 Employee Benefits Security Administration
In 1974, Congress passed ERISA to protect the rights and interests of 

participants and beneficiaries of private sector employee benefit plans. It

outlines the responsibilities of employers and administrators who sponsor

and manage these plans. ERISA also defines fiduciaries as persons who 

(1) exercise discretionary authority or control over the management of a 

private sector employee benefit plan or the plan’s assets, (2) render 

investment advice for a fee or other compensation with respect to plan 

assets, or (3) have any discretionary authority or responsibility to 

administer the plan. Under ERISA, fiduciaries are required to act prudently

and exclusively in the interest of plan participants and beneficiaries. 

Background 

ERISA also describes the types of pension plans that private sector 

employers may sponsor, which include defined benefit and defined 

contribution plans.3

 In 1980, defined benefit plans covered approximately 

38 million participants, while some 20 million individuals participated in 

defined contribution plans. By 2002, the numbers had changed, with 

roughly 42 million participants covered by defined benefit plans and 

approximately 65 million participants in defined contribution plans. Figure

1 shows the shift in participation from defined benefit to defined 

contribution plans since 1980. 

 3

Defined benefit pension plans commonly provide a guaranteed monthly benefit based on a

formula that considers salary and years of service to a company. Under defined 

contribution plans, employees have individual accounts to which an employer, an

employee, or both can make periodic contributions. Defined contribution plan benefits are 

based on contributions and investment returns (gains and losses). 

Page 5 GAO-07-22 Employee Benefits Security Administration
Figure 1: Participants in Defined Benefit and Defined Contribution Plans, 1980-2002

Participants (thousands)

Source: Private Pension Plan Bulletin: Abstract of 1999, 2000, 2001, and 2002 Form 5500 Annual Reports, Department of Labor.

Year

Defined contribution

Defined benefit

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

According to experts, the fact that more workers are now covered by 

defined contribution plans rather than defined benefit plans is significant 

because the risk associated with providing retirement income is shifting 

toward workers and away from employers. Under defined benefit plans, 

the employer is typically responsible for funding the plan to cover 

promised benefits—accounting for any shortfalls due to market 

fluctuations, poor investment decisions, or changing interest rates. In 

contrast, under a defined contribution plan, participants are generally

responsible for ensuring that they have sufficiently saved for retirement 

and generally make their own investment decisions. As a result, much of 

the risk has moved from the employer to the plan participants. Today, with

about one-fifth of Americans’ retirement wealth invested in mutual funds, 

pension and retirement savings plans have become more dependent on the

investment services industry. These plans now include new investment 

vehicles and financial instruments that are more complex and require 

specialized knowledge and expertise for prudent decision making. 

Page 6 GAO-07-22 Employee Benefits Security Administration
EBSA shares responsibility for enforcing ERISA with the IRS and PBGC. 

EBSA enforces Title I of ERISA, which specifies, among other standards, 

certain fiduciary and reporting and disclosure requirements, and seeks to 

ensure that fiduciaries operate their plans in the best interest of plan 

participants. EBSA conducts investigations of plan fiduciaries and service 

providers and seeks appropriate remedies to correct violations of the law, 

and pursues litigation when they determine necessary, as shown in 

figure 2. 

EBSA Shares the 

Responsibility for 

Enforcing ERISA with 

Other Agencies 

Page 7 GAO-07-22 Employee Benefits Security Administration
Figure 2: Overview of EBSA’s Investigative Process 

Source: GAO analysis of EBSA’s process.

investment manager, investment advisor,

s

n

prosecution

I

l

l

l l

l

l l

l l l

l l

l

l

l l

l ll l

l l

l l l

l

l

l l

l

l l

l l l l l

l l l

l l l

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l ll l l

Case

ll

Development

Page 8 GAO-07-22 Employee Benefits Security Administration
IRS enforces Title II of ERISA, which provides, among other standards, tax 

benefits for plan sponsors and participants, including participant 

eligibility, vesting, and funding requirements.4

 IRS audits plans to ensure 

compliance and can levy tax penalties or revoke tax benefits, as 

appropriate. In contrast, PBGC, under Title IV of ERISA, insures benefits 

for defined benefit pension plans when companies default on promised 

pension benefits. To do so, PBGC collects premiums from plan sponsors 

and administers payment of pension benefits in the event that these plans

terminate without sufficient assets to pay all benefits accrued under the 

plan to date. Finally, while SEC does not draw authority from ERISA, it is 

responsible under securities laws for regulating and examining entities 

registered with SEC, such as investment advisers, managers, and 

investment companies that often provide services to plans. Additional 

information on selected agencies’ authorities and enforcement practices is

contained in appendix II.

According to 2002 data, EBSA’s oversight authority covers approximately 

3.2 million private sector pension and health benefit plans with assets over 

$5 trillion and covering more than 150 million participants.5 Of the 

3.2 million plans, EBSA reported that approximately 730,000 are pension 

plans with assets totaling roughly $4.9 trillion and covering over 100 

million participants. EBSA’s 385 frontline investigators are primarily 

responsible for overseeing these employee benefit plans. In contrast, IRS 

and SEC have oversight responsibility for a smaller number of entities. 

Specifically, IRS’s 389 agents conduct oversight for some 1.3 million 

pension, profit-sharing, and stock bonus plans,6

 and the SEC’s 

 4

To achieve tax benefits, referred to as tax qualified status, plans must comply with a 

number of requirements in the Internal Revenue Code governing the provisions of

contributions and benefits. ERISA also includes minimum standards for how employees 

become eligible to participate in pension plans (participation standards), how employees

earn a nonforfeitable right to their benefits (vesting standards), and how the plans are to be

funded (funding provisions). 

5

EBSA also has responsibility for also overseeing other welfare plans, such as those plans 

established to provide vacation benefits or child care services. However, welfare plans with

fewer than 100 participants that are fully insured or otherwise unfunded (hold no assets in 

trust) are not required to file annual reports, so estimates must be made based on surveys. 

As of July 2006, EBSA could not provide GAO with an estimate of the total number of these 

plans, because it had not yet completed an updated survey of such plans. In past years, 

EBSA has estimated the number of health and other welfare plans at 6 million plans. 

6

IRS’s responsibility centers on plans covered by Internal Revenue Code Section 401(a).

EBSA shares some responsibility for the same plans; focusing on fiduciary responsibility 

and prohibited transactions. 

Page 9 GAO-07-22 Employee Benefits Security Administration
1,953 investigators and examiners oversee 17,337 registrants, such as 

investment advisers and investment companies. Table 1 shows the ratio of

investigators, examiners, or agents to the number of plans and entities that 

EBSA, IRS, and SEC regulate. 

Table 1: Ratio of Investigators, Examiners, or Agents to Regulated Employee Benefit Plans and Securities Entities 

Agency 

Investigators, examiners, 

or agents Employee benefit plans/securities entities 

Ratio of personnel to 

regulated plans or entities

EBSA 385 3.2 milliona

pension (0.7 million ) and health benefit plans 

(2.5 million) 

1 : 8,000a

IRS 389 1.3 million

pension plans: 5500 filers (0.7 million), 5500 EZ filers 

(0.2 million), and non-5500 filers (0.4 million)— 

Form 5500s include basic plan information. 

1 : 3,000 

SEC 1,953

includes 851 examiners and 

1,102 investigators 

17,337b

includes investment advisers (9,022), investment 

companies (1,002), broker dealers (6,900), transfer 

agents (400), self- regulatory organizations (11), and 

clearing agencies (2) 

1 : 9 

Source: EBSA, IRS, and SEC. 

a

Because of data limitations, not all other welfare plans under EBSA’s oversight are included. 

b

SEC is also responsible for enforcing certain provisions of the federal securities laws, such as 

provisions pertaining to fraud, that apply to entities and individuals that are not subject to broad 

regulation under the laws. For fiscal year 2005, cases primarily classified as involving regulated 

entities accounted for 32.5 percent of SEC's total actions.

EBSA’s field offices conduct investigations to detect and correct violations 

of Title I of ERISA and related criminal laws. In fiscal year 2005, EBSA had 

roughly 7,800 ongoing investigations, of which approximately 3,400 were 

newly opened as a result of various source leads, such as participant 

complaints, computer targeting, and other agency referrals. EBSA closed 

about 4,000 investigations during that year. 

EBSA’s Participant Assistance staff supplements EBSA’s enforcement 

activities by helping plan participants obtain retirement and health 

benefits that have been improperly denied.7

 In fiscal year 2005, this office 

conducted roughly 2,000 outreach events to educate participants, 

 7

As of January 31, 2006, EBSA reported that it employed 108 benefits advisers in the field 

and the National Office of Participant Assistance. These positions are generally responsible 

for responding to participant complaints and inquiries as well as providing education and 

outreach to participants and the regulated community. 

Page 10 GAO-07-22 Employee Benefits Security Administration
beneficiaries, plan sponsors, and members of Congress about pension plan 

rights and obligations, among other topics. In addition, during the same 

time, the office reported that its benefits advisers closed about 

160,000 inquiries and complaints, some of which resulted in monetary 

recoveries.8

 In those instances where a complaint was not informally 

resolved, EBSA officials said that it was referred to the enforcement staff 

in the field offices for possible investigation. As a result of such referrals, 

EBSA data showed that its investigators closed almost 1,200 investigations

in fiscal year 2005 with monetary results of $130.24 million. 

Additionally, EBSA’s Office of the Chief Accountant is concerned with 

employee benefit plans’ annual reporting and audit requirements and 

enforces those provisions through civil penalties under ERISA.9

 Through 

their combined efforts, EBSA data indicate that the agency reviewed over

36,000 private sector pension plans in fiscal year 2005. Table 2 shows the 

number of plans investigated or contacted by each office. 

Table 2: Number of Pension Plans EBSA Reviewed in Fiscal Year 2005 

EBSA Total number of plans reviewed

Enforcement 7,752

Participant Assistance 19,522

Office of the Chief Accountant 9,208

Total 36,482

Source: EBSA 

Note: According to EBSA, this information includes all plans subjected to some type of review by

EBSA—not all plans were given a full review—which included investigations and inquiries into plan 

activities. For example, EBSA estimated that about 19,500 plans were reviewed, in part, based on 

responses to about 160,000 participant inquiries. Multiple complaints could be filed for a single plan. 

Also, according to EBSA, a number of these reviews targeted service providers, a fact that may have

a further impact on additional plans serviced by these providers. 

DOL’s Office of the Solicitor supports EBSA regional offices by litigating 

civil cases and providing legal support. In fiscal year 2005, the office 

litigated 178 of the 258 civil cases referred to it by EBSA. In addition, 

EBSA conducts criminal investigations in consultation with the U.S. 

 8

We did not independently verify whether the amount reported as a recovery by EBSA was

actually restored to the respective employee benefit plans and participants. 

9

The Office of the Chief Accountant comprises three divisions: the Division of Accounting

Services, the Division of Reporting and Compliance, and the Division of Federal 

Employees’ Retirement Income Security Act of 1986 Compliance. 

Page 11 GAO-07-22 Employee Benefits Security Administration
Attorneys’ offices and in many cases, conducts joint enforcement actions

with other federal, state, and local law enforcement agencies. EBSA 

conducted about 200 criminal investigations in fiscal year 2005. As a result, 

over 100 plan officials, corporate officers, and pension plan service 

providers were indicted.

In 2002, we identified several weaknesses in EBSA’s management of its 

enforcement program, including the lack of a centrally coordinated quality 

review process, better coordination needed among its investigators, the 

lack of data to assess the nature and extent of noncompliance, and limited 

attention to its human capital management, despite the agency’s actions to

strengthen the program in prior years. Since our 2002 review, EBSA has 

improved its enforcement program. However, several challenges remain. 

The agency has promoted coordination among regional investigators, 

implemented quality controls, and developed strategies to address its 

workforce needs. To promote compliance, EBSA has increased its 

educational outreach to plan participants, sponsors, and service providers,

and increased participation in its voluntary correction programs. However, 

the agency has not fully addressed concerns from our prior reviews. 

Specifically, EBSA still has not (1) developed complete data on the nature

and extent of plans’ noncompliance, (2) established a formal coordination 

protocol with SEC within its regional offices, and (3) formally evaluated 

the factors affecting staff attrition. 

In recent years, EBSA has addressed many of the concerns we raised in 

our 2002 review. As shown in table 3, such improvements include 

promoting coordination among regional investigators, implementing 

quality controls, and developing strategies to meet its workforce needs. 

EBSA Has Made 

Improvements to Its 

Enforcement 

Program, but 

Challenges Remain 

EBSA Has Made Some 

Progress in Improving Its 

Enforcement Program 

Page 12 GAO-07-22 Employee Benefits Security Administration
Table 3: EBSA Actions Taken in Response to GAO Recommendations from 2002 Review

GAO observation GAO recommendation to EBSA 

Examples of EBSA actions to address 

recommendation

Certain requirements, such as

notifying plan participants of 

potential violations and levying

excise taxes on prohibited

transactions, may hinder 

participation in the Voluntary 

Fiduciary Correction Program

(VFCP). 

Analyze barriers to participation in 

the VFCP and explore ways to

reduce them. 

EBSA has simplified and expanded the original VFCP 

regulation published in 2002, which describes how to apply 

for voluntary correction, the 19 categories of transactions 

covered, acceptable methods for correcting violations, and 

examples of potential violations and corrective actions. 

Applications received for voluntary corrections increased 

from 55 in fiscal year 2002 to 985 in fiscal year 2005. 

EBSA had not adequately 

estimated the nature of employee 

benefit plans’ noncompliance with 

ERISA provisions. 

Develop a cost-effective strategy for 

assessing the level and type of

ERISA noncompliance among 

employee benefit plans. 

In fiscal year 2001, EBSA conducted a national 

compliance study of group health plans’ compliance with

the new health care laws in ERISA. In 2003, EBSA 

conducted a compliance study focusing on large multiemployer health plans. Currently, the agency is conducting

a baseline study to determine the level of compliance with 

ERISA requirements on timely transmission of employee 

contributions to pension plans. 

EBSA gave limited attention to 

human capital management 

despite anticipated workforce and 

enforcement workload changes. 

For example, the agency had not 

considered succession planning 

and workforce retention, which 

could undermine the continuity and 

effectiveness of its enforcement 

program. 

Conduct a comprehensive review of 

the agency’s future human capital 

needs, including the size of its 

workforce, the skills and abilities 

needed, succession planning 

challenges, and staff deployment 

issues. 

EBSA conducted an employee workforce analysis and an 

employee training needs assessment. In 2003, DOL 

issued its Human Capital Strategic Management Plan, 

which provided DOL’s strategies for addressing current 

and projected skills shortages, anticipated future staffing 

needs, and competency requirements to ensure that 

employees possess or acquire the critical skills needed to 

accomplish program mission and functions. 

EBSA lacked a centrally 

coordinated quality review process 

to ensure that its investigations are 

conducted in accordance with its 

investigative procedures. 

Develop a closed case quality 

review process that ensures the 

independence of reviewers and 

sufficiently focuses on substantive 

technical case issues. 

In fiscal year 2003, an EBSA team composed of Office of 

Enforcement and field managers developed a closed case 

quality review program. The program focuses on 

substantive technical issues, and findings are reported 

centrally to the national office. Although regional office 

officials administering the program reviewed their own 

office’s cases for quality, the program includes procedures 

to ensure the independence of the case reviewer. 

EBSA had not routinely analyzed 

the full range of cases investigated 

to determine which sources were 

the most effective in terms of 

detecting and correcting violations. 

Conduct regular reviews of the

sources of cases that lead to 

investigations. 

EBSA conducted analysis on cases closed in fiscal years 

2001, 2002, 2003, and 2004. The agency agreed to 

perform reviews of the sources of cases that lead to 

investigations on an annual basis as long as resources 

permit. 

EBSA did not coordinate the 

sharing of best practices 

information among its regions 

regarding case selection and 

investigative techniques. 

Coordinate the sharing of best 

practices information among regions 

relating to the optimum and most 

productive techniques for selecting 

and conducting investigations.

EBSA established a Best Practices Sharing Team 

composed of enforcement staff and regional 

representatives. The agency also developed an intranet 

site to allow its investigators to share best practices, such 

as investigative plans, subpoenas, letters, and 

investigative guides. 

Source: GAO analysis.

Page 13 GAO-07-22 Employee Benefits Security Administration
As part of its workforce efforts, EBSA has recruited investigators with 

advanced skills in accounting, finance, banking, and law that EBSA 

believes are required because of the technical aspects of ERISA and the 

changing nature of benefit plans. As of September 2005, EBSA employees 

were among some of the highest educated within DOL, and EBSA staff 

data indicated that investigators have wide-ranging skills and backgrounds 

similar to those investigators at IRS and SEC. For example, EBSA reported 

that 46 percent of its investigators hold law degrees, with some of these 

staff also holding additional degrees or certificates in accounting or 

business administration as well as other subject areas. Also, EBSA 

reported that 27 percent of its investigators or auditors had undergraduate

degrees in accounting, with several also having skills in forensic 

accounting or fraud examination. Several investigators and auditors had 

other advanced degrees, such as master’s degrees in business 

administration, law, and public policy, as well as backgrounds in 

securities, taxation, banking, insurance, and employee benefits. 

Recognizing a need for fraud examination skills, EBSA now includes a 

course on forensic accounting in its basic training of newly hired 

investigators, and EBSA data showed that the agency also sent many of its 

investigators to the Federal Law Enforcement Training Center over the 

last several years to take courses in fraud examination as well as money 

laundering and health care fraud. 

Since 2002, EBSA has also used several initiatives to recruit its staff. EBSA 

recruiters attend a variety of job fairs, college campuses, and other events 

to identify and contact applicants with necessary skills. Further, to 

provide national office directors and regional directors additional tools to 

recruit for all occupations, authority has been delegated to approve certain

human capital flexibilities, such as advances in pay and payment of travel 

expenses for employment interviews. 

In addition to attending recruitment events, EBSA uses three principal 

programs to recruit students from law schools, business schools, and 

other specialized disciplines. These programs are the 

Page 14 GAO-07-22 Employee Benefits Security Administration
• Student Career Experience Program (SCEP): designed for 

students to work in positions related to their academic field of 

study while enrolled in school.10 Upon graduation, interns may 

convert to full-time career employees. Since 2002, EBSA has 

employed roughly 100 SCEP participants. As of July 2006, EBSA 

reported that 28 students were participating in the program. 

• Student Temporary Employment Program (STEP):

designed for the temporary employment of students ranging 

from a summer internship to a period generally not to exceed 

1 year. According to officials, some STEP interns join the SCEP 

program after the summer internship ends. Since 2002, EBSA 

has employed 115 interns in the STEP program. As of July 2006, 

EBSA reported that it had 4 participants. 

• Federal Career Intern Program: a 2-year internship program 

that can result in conversion to career employment. EBSA just 

recently began using this program to recruit full-time employees 

who have recently obtained an undergraduate or graduate 

degree. According to EBSA, the program, which allows the 

agency to recruit students outside of the normal hiring process, 

is much faster and more streamlined, enabling EBSA to better 

target candidates. As of July 2006, EBSA reported that 24

students were participating in EBSA’s program and were not 

yet eligible for conversion. 

Furthermore, DOL offers an agencywide Masters of Business 

Administration Fellows Program, which is used to recruit business school 

graduates. This is a 2-year rotational program, at the end of which fellows 

may be converted to career employees. As of 2006, 76 fellows had taken

part in the program across all DOL agencies, including EBSA. 

In addition to addressing our prior concerns on the management of the 

enforcement program, EBSA has established formal criminal coordinator

positions for each regional office and increased funds returned to 

participants through its assistance. With regard to its criminal 

coordinators, EBSA created a new position in each regional office, 

 10To be eligible for the SCEP, students must be enrolled or accepted for enrollment in a

program of study leading to a degree, diploma, or certificate at an accredited high school, 

technical or vocational school, 2- or 4-year college or university, or graduate or

professional school. 

Page 15 GAO-07-22 Employee Benefits Security Administration
modeled after its national office coordinator position, to facilitate 

relationships with law enforcement agencies at the regional level. The 

position works with law enforcement agencies and prosecutors at all 

levels to improve the likelihood that criminal violations will be recognized 

and appropriately investigated. Regional office officials believe that the

position expands their opportunities for criminal prosecutions. For 

example, one regional official said that if the U.S. Attorney’s office did not 

believe it was cost-effective to prosecute an alleged violation, the regional

coordinator would refer cases to the local district attorney’s office for 

prosecution. Additionally, several regional office officials believed that the 

new position would help them better coordinate their criminal 

investigations, ultimately increasing criminal prosecutions. 

EBSA also continues to provide education to plan participants, sponsors, 

and service providers to promote compliance. EBSA’s education program 

is designed to increase plan participants’ knowledge of their rights and 

benefits under ERISA. For example, EBSA anticipates that through 

education, participants will become more likely to recognize potential 

problems and notify EBSA when issues arise. The agency also conducts 

outreach to plan sponsors and service providers, in part, about fiduciary 

responsibilities and obligations under ERISA. For example, EBSA’s benefit 

advisers speak at conferences and seminars sponsored by trade and 

professional groups and participate in outreach and educational efforts in 

conjunction with other federal or state agencies. Some outreach activities 

include 

• briefings to congressional offices, state insurance commissioners, 

and other federal, state, and community organizations; 

• fiduciary compliance assistance seminars for employers, plan

sponsors, and practitioners; and 

• on-site assistance to dislocated workers facing job loss as a result of 

plant closure or layoffs.

EBSA has also increased funds returned to participants through its 

assistance. For example, for fiscal year 2002, the Office of Participant 

Assistance reported that it had recovered approximately $49 million on 

behalf of participants. As of fiscal year 2005, the office reported that it had

increased that amount to about $88 million. 

At the same time, EBSA has increased its enforcement results since 2002. 

According to EBSA data, in fiscal year 2002, for every dollar invested in 

EBSA, the agency’s investigators produced about $7.50 in financial 

benefits, or roughly $830 million in total monetary recoveries. As of fiscal 

Page 16 GAO-07-22 Employee Benefits Security Administration
year 2005, they were producing just over $12 for every dollar—a total of 

$1.6 billion. EBSA officials said that the agency has achieved these results, 

in part, because of recent program improvements and with relatively small 

increases in staff. Full-time equivalent (FTE) authorized staff levels 

increased from 850 in fiscal year 2001 to 875 FTEs in fiscal year 2006. As of 

August 2006, 385 of the 875 FTEs were frontline field investigators. 

In addition, EBSA has increased compliance through its Voluntary 

Fiduciary Correction Program (VFCP) and its Delinquent Filer Voluntary

Compliance (DFVC) Program. The VFCP allows plan officials to disclose 

and correct certain violations without penalty. The program is designed to 

protect the financial security of workers by encouraging employers and 

plan officials to voluntarily comply with ERISA and allows those 

potentially liable for some fiduciary violations under to ERISA to apply for 

relief from enforcement actions and certain penalties, provided they meet 

specified criteria and follow program procedures. Specifically, plan 

officials can correct 19 types of transactions, such as the remittance of 

delinquent participant contributions and participant loan repayments to 

pension plans. If the regional office determines that the applicant has met

the program’s terms, it will issue a “no action” letter to the applicant—

avoiding a potential civil investigation and penalty assessment. As a result 

of the program, in fiscal year 2005, EBSA reported that $7.4 million was 

voluntarily restored to employee benefit plans. Furthermore, the DFVC 

program is designed to encourage plan administrators to comply with 

ERISA’s filing requirements. According to EBSA data, the program has 

increased the number of unfiled annual reports received from about 

3,000 in fiscal year 2002 to over 13,000 in fiscal year 2005. 

EBSA Still Does Not 

Estimate Overall Industry 

Compliance, Regularly 

Confer With SEC Staff on 

Industry Trends, and 

Address Retention of 

Investigators 

Despite improvements in its enforcement efforts, EBSA has not 

completely addressed several weaknesses we previously identified. 

Specifically, EBSA has not systematically estimated the nature and extent

of pension plans’ noncompliance, a fact that limits the agency’s ability to

assess overall industry compliance with ERISA and measure the 

effectiveness of its enforcement program. In 2002, we recommended that

EBSA take steps to develop a cost-effective strategy for assessing the level 

and type of noncompliance among employee benefit plans. In response, 

EBSA stated that it had established its ERISA Compliance Assessment 

Committee and had embarked on a statistical study to gauge health plans’

noncompliance with the provisions of Part 7 of ERISA, dealing with group 

Page 17 GAO-07-22 Employee Benefits Security Administration
health plan requirements.11 Although EBSA has conducted and continues 

to generate some statistical studies to measure noncompliance in the 

pension and health care industries, its pension compliance data remain 

limited, focusing on information such as the timeliness and full remittance 

of employee contributions to defined contribution plans. However, as of 

June 2006, EBSA officials could not provide an estimated time frame for 

results of its timeliness and remittance study. Although EBSA has taken 

steps, the agency still did not know the nature and extent of 

noncompliance within the pension industry, and its ERISA Compliance 

Assessment Committee had not yet planned any additional pension 

compliance baseline studies. 

EBSA’s limited noncompliance information may also prevent EBSA from 

effectively measuring the overall performance of its enforcement program. 

The Government Performance and Results Act of 1993 requires that 

executive agencies demonstrate effectiveness through measurable resultoriented goals. According to the Office of Management and Budget,12 DOL 

has selected output measures as proxies to compensate for the difficulty

in measuring overall performance. Since our 2002 review, EBSA’s 

enforcement program continues to use performance measures that 

generally focus on how well the agency is managing and using its 

resources—such as the number of specific investigations closed with 

results—rather than on its overall impact on the security of employee 

benefits. Some regional office officials we visited raised concerns that the 

current measures and expected increases to EBSA’s performance goals in

the coming years would likely result in an inability to review and conduct

more complex cases, given each office’s limited resources and the need to 

close cases with results. For example, one of EBSA’s performance goals is 

to close 69 percent of its civil investigations with results in 2006, with 

planned increases to that goal of 3 percent per year until 2008—to 

75 percent. Some regional officials stated that meeting the revised 

performance goal encourages a focus on cases that are more obvious and 

easily corrected, such as those involving employee defined contribution 

 11Part 7 of ERISA includes requirements on group health plan portability, access, and 

renewability, including limitations on the use of preexisting condition exclusions based on

health status. 

12The U.S. Office of Management and Budget assists the President in overseeing the

preparation of the federal budget and supervising its administration of executive branch

agencies. Furthermore, the agency evaluates the effectiveness of agency programs, 

policies, and procedures; assesses competing funding demands among agencies; and sets 

funding priorities. 

Page 18 GAO-07-22 Employee Benefits Security Administration
plans, rather than on investigations of complex and emerging violations 

where the outcome is less certain and may take longer to attain. Without 

data to assess the extent and nature of noncompliance, as we 

recommended in 2002, EBSA will continue not to have effective measures 

for assessing the overall effectiveness of its enforcement program. 

In a 2005 testimony, we also noted that EBSA needed to better coordinate

with the SEC on issues related to the securities and pension industries.13

Although the two agencies periodically share information, we found that 

EBSA has not yet established a systematic procedure by which its 

investigators in all its regional offices can regularly confer with their 

respective SEC regional office. Under the securities laws, SEC is subject to 

confidentiality restrictions with respect to information it can disclose to

EBSA pertaining to an ongoing investigation, even if the information 

pertains to possible violations of ERISA.14 For example, if SEC investigates 

a securities trading firm and has reason to believe that information 

discovered during the investigation might be of interest to EBSA 

investigators, SEC may alert EBSA to their findings. Likewise, EBSA 

investigators can alert SEC to information that is discovered during an 

ERISA investigation that might be of interest to SEC. However, unlike 

EBSA, SEC may not share documentation associated with its findings 

unless EBSA submits a written request for information which, if approved, 

allows access to any evidence that SEC has obtained during the course of 

its investigation. 

In an attempt to expedite the information-sharing process, certain EBSA 

regional offices, but not all, have established informal working groups of

investigators that regularly meet with SEC investigators to exchange

information. For example, one region has established an “SEC Group,” 

which regularly meets with SEC investigators to develop case information 

and potential leads. In contrast, another region stated that it has very little 

contact with SEC and only learns about SEC investigations through the 

media. While not all EBSA regional and district offices may have the same 

need to interact with SEC because of the nature of the private sector 

companies within their jurisdiction, EBSA may not have knowledge of an

SEC investigation involving the same entity in those offices where no 

 13GAO-05-784T. 

14SEC personnel are prohibited from disclosing information obtained as a result of an

examination or investigation without the approval of senior management at the SEC acting 

pursuant to delegated authority of the SEC. 

Page 19 GAO-07-22 Employee Benefits Security Administration
working group exists unless such knowledge is disclosed to the public,

therefore limiting its awareness of potential violations. 

Further, EBSA has not developed initiatives to ensure retention of its 

investigative staff, despite its improvements in human capital

management. In 2002, we reported that EBSA had one of the highest 

attrition rates within DOL. Since our review, we found that EBSA’s overall 

attrition rate remained high, and in recent years, attrition rates for EBSA’s 

investigators appear to have risen. Table 4 shows the attrition rates of 

EBSA investigators including students that occupy investigator positions 

in the GS-1801 series, as compared to the attrition rates of similar groups. 

Table 4: Overall Attrition Rates (Percentages) for EBSA Investigators, Other EBSA 

Employees, DOL, and Other Federal Agencies, Fiscal Years 2001-2005

Fiscal 

year 

EBSA 

investigatorsa

EBSA 

agencywide 

All other 

DOL employees

All other federal 

investigatorsa

2001 7.1 9.4 9.1 5.2

2002 3.3 8.4 8.7 4.3

2003 3.4 7.2 6.7 6.3

2004 5.6 8.9 6.1 5.4

2005 11.2 10.8 8.8 5.2

Source: GAO analysis of OPM’s Central Personnel Data File. 

a

Investigators represent all designated GS-1801 investigative positions, including those employed 

under the student temporary employment program. EBSA investigators in training (students—GS1899 series) are not included in the attrition rate calculations—attrition for 1899 classification is: 62 

percent (‘01), 83 percent (‘02), 63 percent (‘03), 54 percent (‘04), and 45 percent (‘05). EBSA also 

hires auditors—classified as a GS-511—which are a part of the investigative staff. 

511 auditors are not included in the table. We determined the overall attrition rates for this 

classification as follows: 10.4 percent (‘01), 2.3 percent (‘02), 8.6 percent (‘03), 

9.7 percent (‘04), and 7.7 percent (‘05). 

Specifically, data suggest that EBSA’s attrition rates for investigators have 

climbed since 2002, and as of 2005, EBSA investigators were leaving at 

twice the rate of other federal investigators. In fact, as of fiscal year 2005,

EBSA had lost 102 investigators since fiscal year 2002 for various reasons, 

such as resignations and retirement. For example, in fiscal year 2005, 

EBSA lost 52 investigators, of which 34 left for employment outside of the 

federal government.15 While this may be due in part to EBSA employing 

 15In prior fiscal years, the following number of investigators left EBSA for various reasons 

including retirement, resignations, and terminations: 45 (‘00) 26 (‘01), 13 (‘02), 14 (‘03), and 

23 (‘04). 

Page 20 GAO-07-22 Employee Benefits Security Administration
temporary students as entry-level investigators, between fiscal year 2002

and fiscal year 2005, 58 investigators had left EBSA for employment 

outside of the federal government. 

According to regional office officials in several offices we visited, 

particularly in major urban areas, they had difficulties retaining newly 

hired investigators because of insufficient compensation, and some 

believed that these staff used EBSA as a training ground for the private 

sector employee benefit plan industry where they could earn higher 

salaries. For example, in the San Francisco regional office, officials 

reported that the investigator attrition rate has averaged about 13 percent 

per year, and as of April 2006, officials reported that 50 percent of their 

staff had less than 3 years of experience. While other agencies may face 

similar attrition problems in such urban areas, EBSA has taken limited 

steps to evaluate the impact such attrition has on its operations. 

Officials from EBSA’s Office of Program Planning, Evaluation and 

Management reported that the agency dropped earlier considerations for 

retention strategies, such as student loan repayment and retention 

bonuses, in view of data that suggest investigators are usually leaving for 

much higher salaries elsewhere. Although EBSA has employed exit 

surveys, the agency has limited processes to evaluate why its investigators 

are leaving the agency, nor has the agency evaluated the extent to which

other retention initiatives may be useful. While EBSA may be able to 

recruit new investigators and to fill vacant positions, the continued 

turnover requires additional resources for training new staff. Further, the 

relative inexperience of new staff may have an adverse effect on EBSA’s 

enforcement program’s efforts. 

Although EBSA regularly targets violations, it does not conduct routine 

compliance examinations or comprehensive risk assessments to direct its 

enforcement practices, as do other federal agencies that share similar 

responsibilities. Rather, the agency relies on various sources for case 

leads, such as outside complaints and informal targeting of plans, to focus 

its enforcement efforts. While these leads are important, in addition to 

undertaking such activities, agencies such as IRS and SEC have developed 

routine compliance programs to detect violations and identify emerging 

trends that may warrant further examination by enforcement staff. 

Moreover, SEC and PBGC have dedicated staff to perform broad risk 

assessments by analyzing information from multiple sources in order to 

anticipate, identify, and manage risks to investors and to the pension 

insurance system. 

Unlike Other 

Agencies, EBSA Does 

Not Conduct Routine 

Compliance 

Examinations or 

Comprehensive Risk 

Assessments 

Page 21 GAO-07-22 Employee Benefits Security Administration
EBSA does not conduct routine compliance examinations—evaluations of 

a company’s books, records, and internal controls—limiting its ability to 

detect and deter violations. Rather than conduct such examinations, EBSA 

relies on several sources for case leads. For example, EBSA uses 

participant complaints and other agency referrals as sources of 

investigative leads and to detect potential violations. Moreover, EBSA 

identifies leads, in part, through informal targeting efforts by investigators, 

primarily using data reported by plan sponsors on their Form 5500 annual 

returns. While these sources are important, such methods are generally

reactive and may reveal only those violations that are sufficiently obvious

for a plan participant to detect or those disclosed by plan sponsors on 

their Form 5500s,16 and not those violations that are possibly more 

complex or hidden. Nevertheless, EBSA officials raised concerns that 

conducting such examinations would divert resources from EBSA’s 

current enforcement practices. 

EBSA Does Not Conduct 

Routine Compliance 

Examinations 

In contrast, IRS and SEC use such examinations in an effort to detect 

violations or identify weaknesses that could lead to violations. IRS’s Office 

of Employee Plans administers a compliance examination program to 

detect violations of tax laws related to pension plans. According to agency 

officials, IRS dedicates eight staff members for selecting entities for 

examinations, and IRS uses a risk-based process for selecting and scoping

such examinations. If a violation is detected during an examination, IRS 

can subsequently levy penalties and excise taxes on the violators.17 In 

fiscal year 2005, the Office of Employee Plans closed 8,230 examinations. 

Similarly, SEC’s Office of Compliance Inspections and Examinations 

(OCIE) detects violations of securities laws through its examination 

 16ERISA requires that most pension plan sponsors file an annual report called the Form 

5500, which is a major source of information about the plan and provides a key compliance 

tool for identifying and targeting potential violations. The 5500 is the primary source of

detailed pension plan information and is used by EBSA, IRS, and PBGC for compliance,

research, and public disclosure purposes. Information collected on the form includes basic 

plan identifying information as well as detailed plan information, including assets, 

liabilities, insurance and financial transactions, audited financial statements, and for 

defined benefit plans, an actuarial statement. 

17An excise tax applies to certain types of distributions from qualified plans. According to

IRS, about 16,000 plans owed excise taxes totaling roughly $129 million for various 

violations, including failure to meet certain funding standards, excess fringe benefits, and

failure to protect liquidity shortfalls between December 2004 and November 2005. 

Page 22 GAO-07-22 Employee Benefits Security Administration
program.18 OCIE examines advisers, investment companies, brokerdealers, and other registered entities to evaluate their compliance with the

federal securities laws, to determine if they are operating in accordance

with disclosures made to investors, and to assess the effectiveness of their 

compliance control systems. SEC conducted 2,056 examinations of 

investment advisers and investment companies in fiscal year 2005. 

IRS also uses examinations in an attempt to identify emerging areas of 

noncompliance and analyze compliance risk levels among specific types of 

pension plans. IRS plans to use this information in its risk-based 

examination selection process, similar to recommendations that we made 

to EBSA in 2002. As part of this effort, IRS, which has a similar resource 

level to EBSA, is in the process of conducting examinations to develop

compliance baselines for 79 market segments it identified based on 

business sector and plan type. For example, IRS is developing separate 

baseline compliance levels for 401(k) plans, defined benefit plans, 

employee stock ownership plans,19 and profit-sharing plans in the 

construction industry. IRS officials expect the baselines to be completed 

by the end of fiscal year 2007. Likewise, SEC, which has fewer entities to 

oversee and more resources than EBSA, attempts to use its examination 

program to identify emerging trends. In addition to its other examination 

types, SEC conducts sweep examinations—compliance examinations that 

focus on specific industry issues among a number of registrants—to 

remain informed of securities industry developments. For example, SEC 

initiated a sweep examination of several pension plan service providers to

identify conflicts of interest between the providers and the plan sponsors.20

Furthermore, because of the number of EBSA investigators relative to 

employee benefit plans, EBSA’s presence in the pension industry is 

limited, therefore decreasing the possibility that a plan may be 

 18SEC’s examination program includes three main types of examinations—cause, routine,

and sweep. Cause examinations are initiated for a specific reason, such as an investor 

complaint of an alleged violation. Routine examinations, compliance examinations initiated 

on a risk-based cycle, are the most common. SEC conducts sweep examinations, which 

focus on specific industry issues rather than a specific registrant, to examine specific risk

areas. 

19An employee stock ownership plan is a retirement plan into which the company 

contributes its stock for the benefit of the company’s employees. With such plans, 

employees do not buy or hold the stock directly. 

20U.S. Securities and Exchange Commission. Staff Report Concerning Examinations of 

Select Pension Consultants (Washington, D.C.: May 16, 2005). 

Page 23 GAO-07-22 Employee Benefits Security Administration
investigated. A compliance examination program, in part, is designed to 

establish a presence by regularly reviewing entities’ operations, thereby 

likely creating a deterrent to noncompliance. For example, IRS officials 

said that they believe that their program deters violations from occurring 

because they select many plans for review each year based on established 

risk criteria. Because fiduciaries are unsure when IRS’s agents may review

their activities, IRS officials believe that the agency has created an 

environment that encourages compliance. Likewise, EBSA officials believe

that their voluntary compliance programs are also successful at deterring

violations, because employers and fiduciaries want to disclose and correct

violations instead of being investigated and prosecuted. However, given 

the ratio of employee benefit plans to investigators, EBSA’s limited 

presence may create an incentive for fiduciaries or plan sponsors to take 

compliance lightly, even though EBSA attempts to deter violations through 

its correction programs and publicizing its enforcement results. 

EBSA Has Not Dedicated 

Staff to Formalized Risk 

Assessment 

Although EBSA’s enforcement strategy emphasizes targeting violations 

and protecting plan participants at risk, EBSA has no staff dedicated to

conduct broad risk assessments of multiple sources of information, 

including, but not limited to, investigations, academic research, 

compliance studies, and other market data. While the agency attempts to 

identify areas of risk through its efforts in establishing its national 

priorities and projects, this effort ultimately relies on regional 

investigators to identify developing problems—generally in the course of

their existing investigations. EBSA’s Strategic Enforcement Plan directs 

EBSA to establish national investigative priorities to ensure that its 

enforcement program focuses on areas critical to the well-being of 

employee benefit plans. On the basis of these priorities, EBSA annually 

develops national and regional projects based on unique or problematic 

issues identified within a region’s geographic jurisdiction in accordance 

with its strategic plan. Depending on the prevalence of a specific problem 

across regions, it can be elevated to a national project. For example, EBSA 

has recently implemented a national project focusing on pension 

consulting services, called the Consultant/Advisor Project, which is aimed 

at identifying plan service providers, particularly investment advisers, who 

may have a conflict of interest that could affect the objectivity of the 

advice they provide their pension plan clients. However, because EBSA 

relies primarily on identifying risk through its investigations and targeting,

which offer no systematic, analytic process for anticipating new types of 

violations before they become pervasive, its risk assessment approach 

may be limited. 

Page 24 GAO-07-22 Employee Benefits Security Administration
Unlike EBSA, some federal agencies, such as SEC and PBGC, have 

dedicated staff to analyzing information from multiple sources to assess 

external risk within their regulated industries. Once risks are identified, 

the agencies develop and focus their enforcement strategies to mitigate 

and manage them. In 2004, SEC established the Office of Risk Assessment 

(ORA) to coordinate the SEC’s risk management program. While relatively

small, ORA serves as the agency’s risk management resource and works 

with other SEC departments to identify and manage risks. According to 

ORA officials, the office’s five staff identify and assess areas of concern 

through expert analysis, such as new and resurgent forms of fraud and 

illegal activities. For instance, ORA worked in conjunction with OCIE to 

develop a database to collect and catalog such issues within the securities

industry in order to evaluate risk to investors. OCIE then uses this 

database to select cases for its examination program. Also, PBGC has 

dedicated one employee—supported by staff in various departments—for 

risk assessment within its Department of Insurance Supervision and 

Compliance. PBGC officials believe this has strengthened its operational 

capability to identify and monitor risks to its pension insurance program, 

including macroeconomic factors, industry-specific risks, and matters 

relating to specific plan sponsors. PBGC officials also stated that these 

efforts play a role in PBGC’s financial reporting processes, including 

valuing its benefit liabilities and determining whether liabilities associated 

with distressed plans should be classified as liabilities in PBGC’s financial 

statements, as required by generally accepted accounting principles. 

Certain statutory obstacles may limit EBSA’s effectiveness in overseeing 

private sector pension plans. First, the restrictive legal requirements of the 

502(l) penalty under ERISA have limited EBSA’s ability to assess penalties

and restore plan assets. According to EBSA officials, the penalty 

discourages parties from quickly settling claims of violations, thereby 

impeding the restoration of plan assets. Further, EBSA officials stated that 

in some instances, the penalty can also reduce the amount of money 

restored to plan participants when a plan sponsor is unwilling to or cannot 

fully restore assets and pay the penalty. Second, investigators’ access to 

timely plan data for targeting new case leads is limited by ERISA filing 

deadlines. As a result, the data can be several years old. In fact, in some 

cases, investigators were relying on data up to 3 years old to target 

potential violators. While EBSA is constrained by ERISA’s filing 

requirements, the agency has taken steps to address processing delays in

an effort to provide more timely data to investigators and to improve its 

targeting efforts. 

Statutory Obstacles 

May Limit EBSA’s 

Ability to Oversee 

Pension Plans 

Effectively 

Page 25 GAO-07-22 Employee Benefits Security Administration
Restrictive legal requirements have limited EBSA’s ability to assess 

penalties against fiduciaries or other persons who knowingly participate in

a fiduciary breach, and the penalty provision under Section 502(l) of 

ERISA has delayed and in certain instances prevented the restoration of 

funds to pension plans. Under ERISA, EBSA must assess penalties based 

on monetary damages, or more specifically, the restoration of plan assets.21

Section 502(l) of ERISA requires EBSA to assess a 20 percent penalty 

against a fiduciary who breaches a fiduciary duty under, or commits a 

violation of, Part 4 of Title I of ERISA or against any other person who 

knowingly participates in such a breach or violation, and the penalty is 

20 percent of (1) the “applicable recovery amount,” (2) the amount of any 

settlement agreed upon by the Secretary, or (3) the amount ordered by a 

court to be paid in a judicial proceeding instituted by the Secretary. 

However, the penalty can only be assessed against fiduciaries or knowing 

participants in a breach by court order or settlement agreement. 

Therefore, if there is no settlement agreement, or court order, or if 

someone other than the fiduciary or knowing participant returns plan 

assets, EBSA cannot assess the penalty. 

Restrictive Statutory 

Requirements Can Impede 

the Restoration of Plan 

Assets 

In those instances where EBSA does pursue formal settlement, officials 

stated that the penalty can discourage parties from quickly settling claims 

of violations, because violators almost always insist on resolving all of 

EBSA’s claims in one settlement package, including both the amount to be 

paid to the plan and the amount paid in the form of a penalty. In many of 

these cases, violators have contested the penalty, in turn delaying 

settlement and impeding restoration of plan assets. 

In addition, officials stated that the penalty can, in some instances, reduce

the amount of money restored to the plan participant when a plan sponsor 

is unwilling to or cannot fully restore assets and pay the penalty. 

Currently, EBSA has limited discretion to waive or reduce the 20 percent 

penalty in situations where it reduces the funds returned to the plan.22

Because ERISA requires the penalty to be paid to the U.S. Department of 

the Treasury, if insufficient funds exist to restore plan assets and pay the 

penalty, plan assets may not be completely restored. For example, if a plan 

sponsor is found to have breached its fiduciary duty and the amount 

 21EBSA can also seek removal of a fiduciary for breaches of fiduciary duty or seek other 

sanctions. 

22The Secretary of Labor may waive or reduce the penalty if: (1) the fiduciary or other

person acted reasonably and in good faith, or (2) because of severe financial hardship. 

Page 26 GAO-07-22 Employee Benefits Security Administration
involved is $1,000,000 and the sponsor has only $900,000 left in its 

possession, the amount returned to the plan participants will be 

$720,000 (80 percent), and a penalty of $180,000 (20 percent) will be paid 

to the U.S. Treasury. 

Investigators’ Access to 

Timely Data Limited by 

ERISA Filing Deadlines 

Under ERISA, plan sponsors have up to 285 days to file their annual Form

5500 reports,23 limiting EBSA investigators’ access to timely information 

necessary for targeting new case leads. In addition, as we reported in 2005, 

processing delays and the time necessary to correct errors can result in a 

further delay of up to 120 days after a plan’s year end—increasing the 

potential delay to over 400 days.24 As a result, in 2006, EBSA investigators 

were generally relying on information from 2003 and 2004 to target 

violations. Because of these delays, fiduciaries may have more time to 

misappropriate plan assets, causing harm to participants for long periods 

before violations are identified. 

Unlike IRS, which supplements its 5500 reviews with risk-based 

compliance examinations, EBSA relies primarily on the 5500 data 

maintained in its ERISA Data System (EDS) for performing its targeting 

efforts. According to officials, EDS provides EBSA investigators with 

about 30 pre-designed, standard programs as well as an ad hoc query 

capability to target pension plans that are perceived to have an increased 

likelihood of violations. For example, investigators stated that, 

historically, some construction contractors have established pensions for 

workers involved with a particular project and then abandoned the plan at 

the project’s completion without fully funding the plan. In this scenario, 

investigators can use EDS ad hoc query capability to obtain data on such

plans. However, because of untimely information, plans could already be

abandoned before EBSA investigators identified these types of violations. 

While EBSA is constrained by ERISA’s filing requirements, the agency has 

taken steps to address processing delays in an effort to obtain more timely 

information to improve its targeting efforts. In its fiscal year 2007 

appropriation request, DOL requested funding for an updated electronic 

filing system—known as EFAST2—with the goal of expediting the Form 

 23A plan has 210 days from the end of the plan year to file the 5500, and plans may apply for 

an extension of an additional 21⁄2 months. 

24GAO, Private Pensions: Government Actions Could Improve the Timeliness and

Content of Form 5500 Pension Information, GAO-05-491 (Washington, D.C.: June 2005).

Page 27 GAO-07-22 Employee Benefits Security Administration
5500 filing process in two ways. First, EFAST2 is designed so that it will 

not accept Form 5500 data submissions unless they pass a series of edit 

checks. EBSA officials stated that the change should reduce errors and 

processing times. Second, EFAST2 should capture data from prior year 

filings in a manner that officials believe will be more conducive to analysis 

than the current ERISA Filing Acceptance System (EFAST). This new 

system is intended to replace the current process, where approximately 

98 percent of Form 5500s are filed using paper forms, with the remainder 

filed electronically through EFAST. EBSA officials stated that the current 

paper filings take more than three times longer to process than electronic 

filings and have nearly twice as many errors. To address these issues, 

EBSA recently issued a regulation requiring the electronic filing of all 

Form 5500s for plan years beginning on or after January 1, 2008. EBSA 

officials believe that the new requirements and system features will 

provide EBSA with more timely data.

EBSA is a relatively small agency facing the daunting challenge of 

safeguarding the retirement assets of millions of American workers, 

retirees, and their families. Since our 2002 review, EBSA has taken a 

number of steps to strengthen its enforcement program and leverage its 

resources in an effort to implement its enforcement strategy. The agency 

has directed the majority of its resources toward enforcement and has 

decentralized its investigative authority to the regions, allowing its 

investigators more flexibility to focus on issues pertinent to their region. 

Yet despite these improvements, EBSA’s ability to protect plan 

participants against the misuse of pension plan assets is still limited, 

because its enforcement approach is not as comprehensive as those of 

other federal agencies, and generally focuses only on what it derives from 

its investigations. 

Conclusions 

While it has employed some proactive measures, such as computerized 

targeting of pension plan documents, EBSA remains largely reactive in its 

enforcement approach, thus potentially missing opportunities to address 

problems before trends of noncompliance are well established. Currently, 

EBSA does not have the institutional capacity to comprehensively identify

and evaluate evidence of potential risk to participants before emerging 

violations become pervasive. Although EBSA evaluates risk through the

development of its annual national and regional projects, the agency does

not conduct routine compliance examinations, which could add a key 

piece to the foundation on which to base its broad risk analyses. Further, 

the agency does not systematically draw on outside sources of

information, such as academic studies and industry experts, nor does it 

Page 28 GAO-07-22 Employee Benefits Security Administration
formally assess risk on an ongoing basis, as similar agencies do. As a 

result, EBSA is restricted in its ability to detect new and emerging trends 

or weaknesses that may occur throughout the entire pension industry. 

However, even if EBSA were to conduct such examinations and collect 

additional information, it would not be in a position to identify

overarching problems from these data, because it does not have a 

dedicated workforce for such efforts. 

We understand that dedicating staff for the purpose of identifying risks 

may require trade-offs among EBSA’s competing priorities. Given that 

EBSA investigators are tasked with the responsibility for overseeing 

roughly 3.2 million private pension and health benefit plans, such tradeoffs must be considered carefully, and may involve the inclusion of other 

offices within the agency. Nevertheless, a formal risk assessment function 

can be conducted with modest staff allocations, as demonstrated by the 

PBGC and SEC risk assessment functions. Furthermore, if EBSA officials 

believe that these trade-offs would adversely affect its enforcement 

operations, the agency has the option of seeking additional resources from 

Congress, if necessary. However, such a request should only occur after 

the agency has explored and achieved all available efficiencies within its 

existing resource allocations. Whatever approach is ultimately taken, it is 

critical that EBSA take steps to employ a more assertive enforcement 

approach, or a portion of the pension industry will, in essence, continue to 

lack effective oversight.

While EBSA is considering such options, it is vital that the agency further

explore opportunities to strengthen its existing enforcement program. 

Although EBSA and SEC periodically coordinate efforts on multiple 

issues, the agencies must explore opportunities to identify questionable 

activities through a more systematic coordination effort throughout their

regional offices. While we recognize that not all EBSA regional and district

offices may have the same need to interact with SEC, access to 

information that SEC has obtained about potential violations could save 

investigative resources for both agencies and may also expedite the 

prosecution of fiduciaries who are violating the law. EBSA must also 

explore all possibilities to retain skilled staff so that it does not have to

spend its limited resources on training new staff, and minimize the loss of 

institutional experience. Additionally, even though EBSA has taken steps 

to address the Form 5500 processing delays, EBSA investigators’ access to

timely plan information necessary for targeting new case leads is still 

limited by ERISA’s filing deadline. Moreover, opportunities to expedite 

settlements and restore funds to pension plans may be lost by the fact that 

EBSA has little authority, under current law, to waive a mandatory penalty 

Page 29 GAO-07-22 Employee Benefits Security Administration
when it prevents fully restoring assets to participants. At a time when the 

retirement of millions of Americans is imminent, it is more important than 

ever to take all possible measures to protect their pension assets. 

To strengthen DOL’s ability to protect pension plan assets, Congress 

should consider amending section 502(l) of ERISA to give DOL greater 

discretion to waive the civil penalty assessed against a fiduciary or other 

person who breaches or violates ERISA in instances where doing so would 

facilitate the restoration of plan assets. 

To improve overall compliance and oversight, we recommend that the 

Secretary of Labor direct the Assistant Secretary of Labor, EBSA, to 

• evaluate the extent to which EBSA could supplement its current 

enforcement practices with strategies used by similar enforcement 

agencies, such as routine compliance examinations and dedicating 

staff for risk assessment, and 

• conduct a formal review to determine the effect that ERISA’s 

statutory filing deadlines have on investigators’ access to timely 

information and the likely impact if these deadlines were shortened. 

Direct the Office of Enforcement to 

• establish, where appropriate, formal SEC coordination groups 

in the regional offices, similar to those already in place in some 

EBSA regions. 

Direct the Office of Program Planning, Evaluation and Management to 

• evaluate the factors affecting staff attrition and take 

appropriate steps, as necessary. Such an effort might include a 

market-based study to assess comparable private sector 

compensation within specific geographic locations and include 

recommendations for modifying pay structures, if appropriate. 

We obtained written comments on a draft of this report from the Acting 

Assistant Secretary for the Employee Benefits Security Administration, 

Department of Labor, and from the Director of Enforcement, for the 

Securities and Exchange Commission. EBSA and SEC’s comments are 

reproduced in appendix III and appendix IV, respectively. EBSA and SEC, 

Matter for 

Congressional 

Consideration 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 30 GAO-07-22 Employee Benefits Security Administration
as well as IRS and PBGC, also provided technical comments, which were 

incorporated in the report where appropriate. 

EBSA agreed with three of the four recommendations we made to the 

Secretary of Labor to strengthen EBSA’s enforcement program. EBSA 

disagreed with our recommendation to evaluate the extent to which the 

agency could supplement its current enforcement practices with other 

enforcement strategies, such as conducting routine compliance 

examinations and dedicating staff for risk assessment. While EBSA agreed 

that it should continue to evaluate its enforcement practices on an ongoing basis, the agency stated that it would be premature to emulate the 

SEC and IRS models because GAO did not assess the effectiveness of 

these models. However, our report does not suggest that EBSA copy the 

IRS, PBGC, or SEC models; rather, we suggest that EBSA consider 

incorporating enforcement strategies that are standard practice at many

federal financial regulators, such as the federal banking regulators that 

constitute the Federal Financial Institutions Examination Council as well

as at IRS and SEC. Further, we have highlighted the potential benefit of 

these enforcement strategies in prior GAO work. We recognize and would

expect that EBSA’s implementation of these standard practices could vary 

from other regulatory models, given the nature of its responsibilities. We 

continue to believe that these practices could have merit for EBSA and 

therefore deserve further consideration. 

In addition, EBSA commented that our recommendation to evaluate the 

extent to which it could supplement its investigations with routine 

compliance examinations appeared to be premised on the assumption that 

“some number of completely random investigations would have a 

significant deterrent effect and could better enable [EBSA] to identify 

emerging areas of noncompliance.” We do not believe that completely 

random investigations are appropriate, nor do we recommend that EBSA 

conduct them. Rather, EBSA should consider developing a compliance 

examination program that uses risk-based criteria to target larger or 

higher-risk pension plans with the goal of examining these plans more 

frequently. Based on these criteria, EBSA could select a sample of plans to 

review each year which may identify emerging areas of noncompliance 

with modest resource allocations. 

EBSA noted that it has conducted routine compliance examinations in the 

past as part of its investigative process, an action that it concluded 

resulted in a low number of cases with violations. We believe that 

examinations and investigations are two distinct enforcement practices. 

Specifically, compliance examinations should not only detect potential 

Page 31 GAO-07-22 Employee Benefits Security Administration
violations and deter noncompliance, but also identify mismanagement or

questionable practices that may warrant additional scrutiny by

investigators. Investigations are generally conducted in response to 

possible violations, which can be identified through compliance 

examinations and other sources. We believe that when used together, 

routine compliance examinations and investigations can provide a better 

enforcement capability than investigations alone. 

EBSA commented that the process it uses to identify risk has many of the 

same characteristics as the risk assessment process described in our 

report, and that EBSA investigators gather valuable information from 

employee benefit professionals. Our report recognizes that EBSA 

evaluates risk through its efforts in annually establishing its national 

priorities and projects by reviewing its investigations. However, we believe

that EBSA’s risk assessment efforts fall short of practices used by other 

agencies because the agency lacks staff dedicated to continuously 

monitoring the private sector pension industry and bases its current risk 

assessment approach primarily on its investigative findings. According to

GAO’s Standards for Internal Controls,25 agencies should establish an 

assessment of the risks the agency faces from both internal and external 

sources. For example, agencies should have mechanisms in place to 

anticipate, identify, and react to risks presented by changes, including 

economic, industry, and regulatory changes, that can affect the 

achievement of agency goals and objectives. Although EBSA has taken 

some steps to do this, certain patterns of risk may go undetected because 

EBSA does not have staff dedicated to evaluating risk across the entire 

industry, even though such an effort would not require extensive 

resources as our report highlights. If EBSA were to supplement its existing 

enforcement efforts with staff dedicated to continuously reviewing 

information from multiple sources, such as its investigators’ interviews 

with employee benefits professionals, findings by other agencies, 

compliance studies, and academic research, the agency could better 

anticipate, identify, and react to risk as it emerges, rather than after 

established patterns of risk are detected during its annual planning 

process. We continue to believe that by relying primarily upon the 

identification of risks through its investigations and the existing targeting 

process, some emerging trends or abuse could go undetected. 

 25GAO. Internal Control Management and Evaluation Tool. GAO-01-1008G (Washington, 

D.C.: August 2001). 

Page 32 GAO-07-22 Employee Benefits Security Administration
As we agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after its 

issue date. At that time, we will send copies of this report to the Secretary 

of Labor, the Commissioner of the IRS, the Chairman of the SEC, and 

other interested parties. We will also make copies available to others on 

request. If you or your staff have any questions concerning this report, 

please call me at (202) 512-7215. Key contributors are listed in appendix V. 

Sincerely yours, 

Barbara D. Bovbjerg 

Director, Education, Workforce, and

Income Security Issues

Page 33 GAO-07-22 Employee Benefits Security Administration
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To determine the steps that the Employee Benefits Security 

Administration (EBSA) has taken in recent years to enforce and promote 

Employee Retirement Income Security Act of 1974 (ERISA) compliance, 

we collected and documented information on EBSA’s enforcement 

strategy, operations, and human capital management practices. We 

reviewed EBSA’s efforts to address recommendations from our prior 

work, focusing on the agency’s management of its enforcement program. 

To document the management of EBSA’s enforcement program, we 

collected and reviewed EBSA’s policies, such as its Strategic Enforcement 

Plan, Enforcement Manual, and regional Program Operating Plans. In 

addition, we obtained EBSA’s enforcement results for fiscal years 2001-

2005. EBSA maintains these results in its Enforcement Management 

System. This system was designed to support not only strategic policy 

decisions, but also day-to-day management of investigator inventories and

activities. To verify the reliability of EBSA’s enforcement results data, we 

interviewed officials from EBSA’s Office of Technology and Information 

Services and corroborated the data with system documentation and the 

systems that produced the data. We reviewed the data for obvious 

inconsistency errors and completeness. From this review, we determined 

that the EBSA-supplied data were sufficiently reliable for the purposes of 

this report and account for EBSA’s enforcement results. We also used data

from the 2002 and 2004 waves of the Health and Retirement Study to 

examine retirement income by source at the median because of the 

presence of extreme outliers. The rank order of Social Security and 

pensions and annuities is the same when evaluated at the mean or median. 

We also interviewed officials from the Department of Labor’s (DOL) Office

of the Solicitor, and Office of Inspector General, as well as EBSA’s Office 

of Enforcement, Office of Participant Assistance, and Office of the Chief 

Accountant. In addition, we selected and visited EBSA’s regional and 

district offices in Atlanta, Boston, Chicago, Kansas City, Philadelphia, San

Francisco, Seattle, and Washington, D.C., where we interviewed EBSA 

field office management, regional solicitors, staff, and investigators. We 

selected these offices based on geographic location and the number and 

types of investigations conducted. Further, we met with representatives 

from professional organizations that represent entities regulated by EBSA 

and plan participants and conduct audits of pension plans. 

In addition, we collected and examined information on EBSA enforcement 

initiatives, the results of its prior internal reviews, and studies performed 

by the DOL Office of Inspector General (OIG). To determine the statutory

restrictions that limit the sharing of information between EBSA and the 

Securities and Exchange Commission (SEC), we interviewed EBSA 

Page 34 GAO-07-22 Employee Benefits Security Administration
Appendix I: Scope and Methodology 

investigators, managers, and attorneys. We also interviewed officials at 

SEC and reviewed the applicable securities laws that govern the sharing of

information related to SEC investigations. Finally, we reviewed past GAO 

work on SEC and consulted the teams within GAO that regularly review 

SEC operations. 

Moreover, to verify claims by regional offices that offices were 

experiencing high rates of attrition, we analyzed data from the Office of 

Personnel Management’s Central Personnel Data File (CPDF). Using these 

data, we identified the newly hired investigators and followed them over 

time to see how many left EBSA. We identified all new hires for fiscal 

years 2000 through 2005 by using personal action codes for accessions and 

career conditional positions. Next, we determined whether these 

individuals had personnel activity indicating they had separated from 

EBSA. Separations (attritions) included resignations, retirements, 

terminations, and deaths. For more on the reliability of the CPDF, see 

GAO’s report on the topic.1

To determine the overall attrition rates for EBSA investigators (not just 

new hires), we analyzed data from the CPDF for fiscal years 2000 to 2005. 

For each fiscal year, we counted the number of employees with personnel 

actions indicating they had separated from EBSA. We did include 

investigators in training, who are classified as GS-1801 investigators, 

because these individuals draw down on EBSA’s overall full-time 

equivalents and play an important part of its hiring process. We divided the 

total number of separations for each fiscal year by the average of the 

number of permanent employees in the CPDF as of the last pay period of 

the fiscal year before the fiscal year of the separations and the number of 

permanent employees in the CPDF as of the last pay period of the fiscal 

year of separations. To place the attrition rates for EBSA investigators in 

context, we compared EBSA’s attrition rates to those for employees in 

other occupations and agencies (EBSA employees, all other DOL, and all

other employees in the executive branch of the federal government.) 

To identify how EBSA practices compare to those of other agencies, we 

interviewed officials from SEC, the Internal Revenue Service (IRS), and 

the Pension Benefit Guaranty Corporation. We selected these agencies 

given their responsibilities in regulating different segments of the private 

 1

GAO, OPM’s Central Personnel Data File: Data Appear Sufficiently Reliable to Meet Most

Customer Needs, GAO/GGD-98199 (Washington, D.C.: Sep. 30, 1995). 

Page 35 GAO-07-22 Employee Benefits Security Administration
Appendix I: Scope and Methodology 

sector pension industry. To identify the types of authorities and practices 

that these agencies used, we collected and reviewed documentation from

ERISA, the Securities Exchange Act of 1934, the Investment Advisors Act 

of 1940, and the Investment Company Act of 1940, as well as prior GAO 

reports. However, we did not evaluate the effectiveness of these agencies’

compliance examination, enforcement, or risk assessment programs. From

this review, we conducted a comparative analysis to identify what types of 

authorities and practices other agencies might have that EBSA did not—a 

detailed comparison can be found in appendix II. 

Furthermore, we identified statutory obstacles within ERISA that limit 

EBSA’s ability to enforce ERISA—the inefficient nature of Section 502(l) 

of ERISA and the lack of timely information for investigators resulting 

from annual reporting deadlines. To identify these obstacles, we 

interviewed several former and current EBSA investigators, reviewed past

GAO and DOL OIG reports on ERISA enforcement, and collected and 

reviewed various documents to corroborate the testimonial evidence 

obtained. Specifically, to determine EBSA’s authority to waive a penalty 

that, in certain situations, reduces the amount of assets returned to plan

participants, we interviewed EBSA investigators and other officials that 

assess and collect the penalty. We also reviewed the relevant section of 

ERISA, which requires the Secretary of Labor to assess the penalty under 

Section 502(l). We obtained and reviewed information regarding the 

number of times the penalty was assessed and the total amount collected 

as a result of the penalty. Finally, we obtained and reviewed court 

decisions that involved the assessment of the 502(l) penalty. Furthermore, 

to determine the timeliness of the information—provided on the Form 

5500—that EBSA investigators use for targeting purposes, we interviewed 

EBSA investigators and management to identify the ways in which 

5500 data are used to identify potential violations. We also reviewed a past

GAO report that thoroughly reviewed the Form 5500 and the processes 

that contribute to the length of time between a plan’s year end and the 

time when the information is available for use by investigators. 

Additionally, we obtained and reviewed system documentation on the 

ERISA Data System (EDS)—the system that EBSA uses to store and query

the 5500 information. Finally, we interviewed EBSA personnel that are 

involved in developing EFAST2, a new electronic filing system that will 

purportedly enable all 5500s to be filed electronically for reporting years 

beginning on or after January 1, 2008. 

Page 36 GAO-07-22 Employee Benefits Security Administration
Appendix II: Comparison of Selected Federal 

Agencies’ Authorities, Enforcement Practices, Appendix II: Comparison of Selected Federal Results, and Resources 

Agencies’ Authorities, Enforcement 

Practices, Results, and Resources 

The Employee Benefits Security Administration, the Internal Revenue

Service, and the Securities and Exchange Commission are responsible for 

enforcing laws designed to protect pension plan participants and other 

securities investors. A comparison of the agencies’ authorities, 

responsibilities, and enforcement practices shows that EBSA lacks certain 

authorities compared to those of other agencies and uses different 

practices. 

Authorities and Penalties 

Title I of ERISA provides the Secretary of Labor, through EBSA, the 

authority to investigate and enforce the requirements and standards of 

Title I. Civil penalties of up to $1,100 per day may be assessed for certain 

violations of reporting and disclosure obligations and a 20 percent penalty 

on an applicable recovery amount may be assessed related to a fiduciary 

breach. There are a number of fairly particularized penalties under ERISA 

that EBSA can impose. Unlike IRS and SEC, EBSA does not have the 

enforcement authority to disband, suspend, or take any effective action 

against a plan auditor for substandard audits of employee benefit plan, 

because plan auditors are not considered fiduciaries under ERISA. 

Title II of ERISA, which amended the Internal Revenue Code (the Code) to 

parallel many of the Title I rules, is administered by IRS. The principal 

responsibility under the Code for IRS is to determine that plans meet 

certain tax qualification requirements as specified in the Code. IRS has 

broad authority to revoke certain tax benefits to plan sponsors if they do 

not meet these requirements. IRS can also assess certain penalties for 

failure to file or furnish certain information required to be filed with the 

agency pertaining to plans. 

SEC, under federal securities laws, has broad authority to enforce and 

regulate the sale of securities and disclosure of information concerning 

these securities. SEC has authority, under its regulations, to maintain fair 

and orderly securities markets and requires specified disclosures of 

corporate financial statements. SEC, through civil penalties and fines, may 

enforce the securities laws to ensure compliance and may impose 

penalties ranging from $5,000 to $500,000 per violation, or in some cases 

the amount of pecuniary gain to the defendant as a result of the violation.

Also, if SEC finds substandard audit work, it has the authority to bar, 

censure, or suspend auditors responsible for such work. 

Page 37 GAO-07-22 Employee Benefits Security Administration
Appendix II: Comparison of Selected Federal 

Agencies’ Authorities, Enforcement Practices,

Results, and Resources 

EBSA IRS SEC

Regulated industry Total employee benefit 

plans: 

3.2 million 

Pension plans: 733,000 

Health plans: 

2.5 million 

Total pension plans: 1.3 million 

plans 

724,000 

(5500 filers) 

221,000 

(5500 EZ filers) 

353,000 

(non-5500 filers) 

Total registered securities 

entities: 17,337

Investment advisers: 9,022 

Investment companies:1,002

Broker/dealers: 6,900 

Transfer agents: 400 

Self-regulatory 

organizations: 11 

Clearing agencies: 2 

Offices with enforcement related

responsibilities 

Office of Enforcement (OE) 

Office of Participant 

Assistance (OPA) 

Office of the Chief 

Accountant (OCA) 

Office of Employee Plans (EP) 

• Examinations 

• Rulings and Agreements 

(R&A) 

• Employee Plans Compliance 

Unit (EPCU) 

Division of Enforcement 

Office of Compliance 

Inspections and Examinations 

(OCIE) 

Office of Risk Assessment 

(ORA) 

Practices Responding to participant 

complaints (OPA) 

Investigations (OE) 

Voluntary compliance 

programs (OE, OCA) 

Reporting and disclosure 

audits (OCA) 

Establish compliance baselines 

for risk assessment 

(Examinations)

Centralized case selection 

process (Examinations) 

Compliance examinations 

(Examinations)

“Soft contact” compliance 

programs (EPCU) 

Voluntary compliance programs 

(R&A) 

Determinations (R&A) 

Investigations (Enforcement) 

Compliance examination 

programs (OCIE) 

Formalized risk assessment 

(ORA) 

Strategic goals Enhance pension and health 

benefit security

Enhance enforcement of the tax 

law 

Enforce compliance with

federal securities laws 

Performance measures Ratio of closed civil cases 

with corrected violations to 

closed civil cases 

Ratio of criminal cases 

referred for prosecution to 

total criminal cases 

Applications to voluntary 

compliance programs 

Customer satisfaction index 

Timeliness 

Examination quality 

Examination cases closed 

EPCU compliance contacts 

Customer satisfaction 

Investment advisers and 

investment companies 

examined 

Percentage of first 

enforcement cases filed within

2 years 

Enforcement cases 

successfully resolved 

Page 38 GAO-07-22 Employee Benefits Security Administration
Appendix II: Comparison of Selected Federal 

Agencies’ Authorities, Enforcement Practices,

Results, and Resources 

EBSA IRS SEC

Fiscal year 2005 results Plans investigated: 7,752a

Civil and criminal 

investigations closed: 3,978 

Closed civil cases with 

corrected violations: 76% 

Referred criminal 

cases: 45% 

Plans reviewed for violations 

by OPA: 19,522 

Voluntary compliance 

applications received: 985 

Plans reviewed for 

completeness by 

OCA: 9,208 

Customer satisfaction 

index: 67% 

Examinations closed: 8,230 

EPCU compliance 

contacts: 145b

Determinations made: 39,864b

Voluntary compliance 

applications: 1,707b

Customer satisfaction for 

determinations: 61%b

Customer satisfaction for 

examinations: 70%b

Investment advisers 

examined: 1,530 

Investment companies 

examined: 527

Percentage of first 

enforcement cases filed within

2 years: 65% 

Enforcement cases 

successfully resolved: 99% 

Fiscal year 2005 resources 2005 appropriation for 

ERISA enforcement 

activities: $131,000,000 

Number of investigators: 385

Number of benefits 

advisors: 108 

2005 appropriation for Office of 

Employee Plans: $91,230,910

Number of agents for 

compliance examinations: 389 

2005 appropriation for Division

of Enforcement: $316,000,000

Number of investigators: 1,102 

2005 appropriation for Office of 

Compliance Inspections and 

Examinations: $210,000,000 

Number of examiners for 

investment advisers and 

investment companies: 489 

Number of examiners for 

broker-sealers and self 

regulatory organizations: 362 

Source: EBSA, IRS, and SEC. 

a

This includes health and pension plans 

b

This is as of August 2005 

Page 39 GAO-07-22 Employee Benefits Security Administration
Appendix III: Comments from Employee Appendix III: Comments from Employee Benefits Security Administration 

Benefits Security Administration 

Page 40 GAO-07-22 Employee Benefits Security Administration
Appendix III: Comments from Employee 

Benefits Security Administration 

Page 41 GAO-07-22 Employee Benefits Security Administration
Appendix III: Comments from Employee 

Benefits Security Administration 

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Appendix III: Comments from Employee 

Benefits Security Administration 

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Benefits Security Administration 

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Appendix IV: Comments from Securities and Exchange Commission Appendix IV: Comments from Securities and 

Exchange Commission 

Page 46 GAO-07-22 Employee Benefits Security Administration
A

A

ppendix V: GAO Contacts and

cknowledgments 

Page 47 GAO-07-22 

Appendix V: GAO Contacts and 

Acknowledgments 

GAO Contact Barbara D. Bovbjerg, (202) 512-7215

The following team members made key contributions to this report: 

David Lehrer, Assistant Director; Jason Holsclaw; David Eisenstadt; 

Joe Applebaum; Kevin Averyt; Susan Bernstein; Sharon Hermes; 

Annamarie Lopata; Jean McSween; Michael Morris; Lisa Reynolds; 

Roger Thomas; Dayna Shah; and Gregory Wilmoth. 

Acknowledgments 

Employee Benefits Security Administration
Related GAO Products 

Page 48 GAO-07-22 

Related GAO Products 

Mutual Fund Industry: SEC’s Revised Examination Approach Offers 

Potential Benefits, but Significant Oversight Challenges Remain. 

GAO-05-415 (Washington, D.C.: August 2005). 

Private Pensions: Government Actions Could Improve the Timeliness 

and Content of Form 5500 Pension Information. GAO-05-491 

(Washington, D.C.: June 2005). 

Employee Benefits Security Administration: Improvements Have Been 

Made to Pension Enforcement Program but Significant Challenges 

Remain. GAO-05-784T (Washington, D.C.: June 2005). 

Mutual Fund Trading Abuses: Lessons Can Be Learned from SEC Not 

Having Detected Violations at an Earlier Stage. GAO-05-313

(Washington, D.C.: April 2005). 

Securities and Exchange Commission Human Capital Survey. 

GAO-05-118R (Washington, D.C.: November 2004). 

Pension Plans: Additional Transparency and Other Actions Needed 

in Connection with Proxy Voting. GAO-04-749 (Washington, D.C.: 

August 2004). 

Mutual Funds: Additional Disclosures Could Increase Transparency of 

Fees and Other Practices. GAO-04-317T (Washington, D.C.: January 2004). 

Answers to Key Questions about Private Pension Plans. GAO-02-745SP

(Washington, D.C.: September 2002).

Private Pensions: IRS Can Improve the Quality and Usefulness of 

Compliance Studies. GAO-02-353 (Washington, D.C.: April 2002). 

Pension and Welfare Benefits Administration: Opportunities Exist for 

Improving Management of the Enforcement Program. GAO-02-232 

(Washington, D.C.: March 2002). 

Securities and Exchange Commission: Human Capital Challenges 

Require Management Attention. GAO-01-947 (Washington, D.C.: 

September 2001). 

Financial Services Regulators: Better Information Sharing Could Reduce 

Fraud. GAO-01-478T (Washington, D.C.: March 2001) 

(130532) Employee Benefits Security Administration
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