In 2016, the Department of Labor (DOL) announced that it was stepping up efforts to ensure that terminated vested participants receive the pension benefits they are due under the terms of their plan. The DOL’s primary targets? Large Fortune 500 defined benefit pension plans whose Form 5500 filings show high numbers of participants eligible for benefits, but not receiving them.
The impetus for this increased enforcement was that audits revealed that many plans had inadequate procedures for locating participants or were not following adequate procedures for doing so, and, as a result, many participants were not receiving their pension benefits. This is a problem for plan sponsors too, as the DOL considers not contacting participants entitled to benefits to be a breach of their fiduciary duties-something that could subject the sponsor to fines.
To give you a sense of the value of the DOL’s stepped up enforcement efforts, between October 2016 and August 2017, its Philadelphia office alone found $165 MILLION in owed pension benefits that were subsequently paid out. Given this success, the DOL plans to increase its audits of DB plans. Ahhh, this is government at its best. 🙂
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