Compliance November 18, 2003

EBSA Rakes in $1.4 Billion in FY 2003

November 18, 2003 (PLANSPONSOR.com) - The Employee Benefits Security Administration (EBSA) has cracked its enforcement whip to the tune of $1.4 billion in fiscal year 2003.
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>EBSA’s 2003 haul represented a 60% increase over the previous year’s results and came from a variety of different enforcement actions.   This included civil investigations, criminal investigations and voluntary fiduciary correction program (VFCP) applications, according to a news release.

>While the number of civil investigations closed may have dropped 13.64% during the past year, the percentage of civil investigations closed with results was up 18.28%.   EBSA attributes this trend to “improved targeting and more resource-intensive investigations.”    Not seeing a drop was the number of criminal investigations closed, up 13.64% from FY 2002, and the number of those investigations closed with guilty pleas or convictions, up 16.33%.

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>Additionally, EBSA’s VFCP, which encourages self-correction of benefit violations, saw a 336% increase in applications in FY 2003 and more than $8.7 million in restored assets to employee plans, an increase of 348%.

>The record windfall for the Department of Labor (DoL) division comes through its enforcement of the Employee Retirement Income Security Act (ERISA).   EBSA’s oversight authority extends to approximately 730,000 pension plans and another 6 million health and welfare plans that cover approximately 150 million workers and their dependents and include assets of nearly $4 trillion.

>Further, the increased enforcement activities reaped rewards for other DoL divisions.   Total back wages including overtime that were collected by the Department’s Wage and Hour division for workers in FY 2003 increased by 21% over the previous year, representing an 11-year high.   The number of workers receiving back wages jumped from 263,593 workers to 342,358 – nearly a 30% increase in one year.

Also recording an increase were the enforcements of the Occupational Safety and Health Administration (OSHA).   OSHA cited employers for 83,760 violations in FY 2003, a nearly 8% increase with nearly 60,000 of those violations were considered serious, an 11% increase over FY 2002.   In all, the enforcement appears to have paid off as the most recent data available show the rates of workplace injuries and fatalities fell to the lowest point ever in 2002.

Benefits November 17, 2003

Workers Growing More Confident About Retirement Saving

November 17, 2003 (PLANSPONSOR.com) - The vast majority (83%) of Americans who have tried to set a financial target for retirement say the exercise had a moderate to large impact on moving them closer to their dream of a comfortable retirement.
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By comparison, only 61% say that regular saving each month without a set goal has had this kind of impact, according to Manulife USA’s Financial Dreams and Fears of American Workers Study. “These findings parallel Manulife USA’s research with employees who participate in the 401(k) plans we provide services to through our group annuity contract,” said Ralph Vizl, Vice President of Strategy and Research for Group Pensions, Manulife USA.

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“Again and again 401(k) participants have told us what a difference setting and working toward a goal makes and how much more confident they feel about retirement after doing this,” Vizl continued. In fact, American workers on the whole have become more optimistic with regard to their financial futures over the past year (See Workers Turn To Employers For Help, Solace ) as shown through how well people feel they are doing in reaching the dream of having a comfortable retirement. Overall, only 67% of American workers now say they are behind schedule or have not started saving for retirement, compared with 75% responding the same in 2002. Further, comfortable retirement has moved up the priority totem pole, with 70% saying it is one of their top two financial dreams, up from 61% in 2002.

Other rays of sunshine were found in an increase in the share of workers surveyed who feel they are doing a good job saving money, with 41% stating they feel excellent or very good, up 8% from 2002. In addition, more than a third (38%) think the economy will get better over the next 12 months, compared to 24% who think it will get worse.

Not surprising then, the confidence has carried over to workers’ opinions about investing, as the survey finds more interest expressed in investing in equities, with 28% growing more comfortable investing in them and only 19% expressing increased comfort investing in more conservative financial products like certificates of deposit. At the same time, the number of financial fears American workers have has dropped to an average of 5.2 financial fears in 2003 out of nine possible, down from 5.6 in 2002.

However, even with two steps forward, there is one step back in that more than half of American workers surveyed still believe they are behind schedule or worse in saving for their retirement and other financial dreams. In fact, one half of all American workers have not tried to calculate how much money they need to have saved by the time they retire, the study found.

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