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. ERISA also describes the types of pension plans that private sector employers may sponsor, which include defined benefit and defined contribution plans. 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. 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. 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. 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. 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. 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, and the SEC’s 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. 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. In fiscal year 2005, this office conducted roughly 2,000 outreach events to educate participants, 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. 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. 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. 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. 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. 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 Student Career Experience Program (SCEP): designed for students to work in positions related to their academic field of study while enrolled in school.