ERISA Insider Vol II., Ed. X: EBSA Recovers More Than $2.4 Billion Dollars In 2021

This years numbers are in — the EBSA closed 69% of its 1,072 civil cases with monetary results, and 52% if its 208 criminal investigations resulted in indictments or convictions.

Each year The Department of Labor (DOL) publishes the results of their enforcement actions and statistics related to violations of the Employee Retirement Income Security Act (ERISA). In fiscal year 2021, The Employee Benefits Security Administration (EBSA) closed 1,072 civil investigations leading to the recovery of more than $2.4 billion dollars to employee benefit plans, participants, and beneficiaries.

These latest numbers show that the EBSA takes non-compliance with ERISA seriously, but also highlights the success of informal complaint resolution and voluntary correction programs.

Currently EBSA oversees nearly 3.4 million combined health, retirement, and welfare plans covering over 158 million workers and $12.9 trillion dollars in plan assets. This makes enforcement programs crucial to ensuring plan beneficiaries and dependents get the benefits they have earned.

EBSA’s goal is to raise the knowledge level of plan participants, sponsors, service providers, and any interested parties and to ensure that they have access to plan documents filed with The DOL.

As part of this goal, EBSA allows workers and plan participants to make informal complaints directly to a benefits advisor which are followed up on within 30 days. EBSA prefers to seek voluntary corrections as a means to resolve violations and restore losses to plans.

With this informal complaint resolution process, EBSA closed more than 175,000 inquiries in 2021 resulting in the recovery of $499.5 million on behalf of plan participants. Most cases are resolved without enforcement action, but for repeated ERISA violations, advisors may refer plan sponsors, employers, and service providers for investigation.

Civil Investigations

Of the $2.4 billion dollars recovered in FY 2021, $1.9 billion was recovered by enforcement actions. Out of 1,072 civil investigations, 741 cases (69%) resulted in monetary compensation or another corrective action. EBSA’s enforcement program found that terminated vested participants played the largest role in these civil cases with 16,024 participants being owed a total of $1.548 billion dollars.

EBSA’s duties extend beyond just monetary related corrections. In 2021, EBSA made 449 non-monetary corrections for the purpose of increasing protections for plans and beneficiaries. Some of these actions included removing 6 fiduciaries and barring 34 individuals from acting as fiduciaries. Additionally, 124 cases involved reforming plan procedures, and 27 cases involved global corrections at the service provider level.

Criminal Investigations

One of EBSA’s primary responsibilities is investigating potential criminal conduct related to ERISA plans. In 2021, EBSA opened 188 criminal cases and closed 208 investigations. Out of the opened cases, 118 dealt specifically with health benefit plans. This resulted in the indictment of 72 individuals including plan officials, corporate officers, and plan service providers. EBSA obtained 38 guilty pleas or convictions, recovering almost $4 million dollars for affected plan beneficiaries.

Voluntary Fiduciary Correction Program

EBSA has recovered a total of $34 million as part of their voluntary national enforcement projects in 2021. To help facilitate voluntary correction of ERISA violations, EBSA introduced the Voluntary Fiduciary Correction Program (VFCP). This allows plan administrators and fiduciaries the chance to remedy errors before they are targeted by an audit, investigation, or enforcement action. EBSA offers significant incentives to fiduciaries that self-correct for non-compliance.

Abandoned Plan Program

When a pension plan is abandoned by their sponsoring employer, EBSA works to expedite the termination and distribution of benefits. This is part of EBSA’s Protecting Benefits Distribution (PBD) Enforcement Project which ensures plan participants aren’t charged unreasonable fees and that abandoned plans are swiftly wound up.

In 2021, Qualified Termination Administrators closed and approved 923 out of 1,770 applications resulting in distribution of $50.8 million to terminated vested participants. EBSA recovered an additional $17.7 million dollars through enforcement actions to resolve abandoned plans.

Don’t Become a Statistic – Protect Yourself From ERISA Violations In 2022 and Beyond

The EBSA works diligently to ensure that workers and plan participants get the benefits they are entitled to. By focusing on voluntary correction and complaint resolution, it shows the EBSA is taking common sense steps to allow employers and fiduciaries to fix ERISA violations in good faith.

This avoids the consequences of enforcement actions IF problems are identified and rectified. But only if violations are identified before an audit – which is why having an experienced, ERISA independent fiduciary is crucial.

In situations where enforcement action is necessary, EBSA has organized its resources in a way that makes the greatest impact. This includes focusing on global plan issues that affect multiple plans and participants as well as investing in enforcement projects to efficiently address non-compliance with ERISA.

This means that staying compliant with ERISA should be a priority so your company doesn’t have to deal with complicated audits and or be caught off guard when a problem is identified.

Schedule Your Free Consultation With An Independent Fiduciary At The ERISA Advisory Group

At ERISA Advisory Group we have been helping companies with ERISA compliance since 1995. Our founder and president, William Kropkof, CEBS, was a former investigator at the Department of Labor for 7 years tasked with investigating Health & Welfare and Retirement Plans.

We are uniquely qualified to design your ERISA plan and maintain compliance with changing laws and regulations. We know how to identify ERISA compliance issues and we know how to prevent and correct them.

If you are looking to hire an independent fiduciary that can take on your fiduciary responsibilities, then schedule a free consultation today to see how we can help you find and correct compliance issues before the EBSA does.

Speak To An Independent Fiduciary At The ERISA Advisory Group