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The Employee Benefits Security
Administration is responsible for administering and enforcing
the fiduciary, reporting and disclosure provisions of Title I
of the Employee Retirement Income Security Act of 1974 (ERISA).
At the time of its name change in February 2003, EBSA was
known as the Pension and Welfare Benefits Administration (PWBA).
Prior to January 1986, PWBA was known as the Pension and
Welfare Benefits Program. At the time of this name change, the
Agency was upgraded to a sub-cabinet position with the
establishment of Assistant Secretary and Deputy Assistant
Secretary positions.
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On
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The provisions of Title I of ERISA, which
are administered by the U.S. Department of Labor, were enacted
to address public concern that funds of private pension plans
were being mismanaged and abused. ERISA was the culmination of
a long line of legislation concerned with the labor and tax
aspects of employee benefit plans. Since its enactment in
1974, ERISA has been amended to meet the changing retirement
and health care needs of employees and their families. The
role of EBSA has also evolved to meet these challenges.
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The administration of ERISA is divided
among the U.S. Department of Labor, the Internal Revenue
Service of the Department of the Treasury (IRS), and the
Pension Benefit Guaranty Corporation (PBGC). Title I, which
contains rules for reporting and disclosure, vesting,
participation, funding, fiduciary conduct, and civil
enforcement, is administered by the U.S. Department of Labor.
Title II of ERISA, which amended the Internal Revenue Code to
parallel many of the Title I rules, is administered by the
IRS. Title III is concerned with jurisdictional matters and
with coordination of enforcement and regulatory activities by
the U.S. Department of Labor and the IRS. Title IV covers the
insurance of defined benefit pension plans and is administered
by the PBGC.
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Prior to a 1978 reorganization, there was
overlapping responsibility for administration of the parallel
provisions of Title I of ERISA and the tax code by the U.S. Department of Labor
and the IRS, respectively. As a result of this reorganization,
the U.S. Department of Labor has primary responsibility for
reporting, disclosure and fiduciary requirements; and the IRS
has primary responsibility for participation, vesting and
funding issues. However, the U.S. Department of Labor may
intervene in any matters that materially affect the rights of
participants, regardless of primary responsibility.
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As a result of the enactment of the Federal
Employees' Retirement System Act of 1986 (FERSA), EBSA has
fiduciary and auditing oversight of the Thrift Savings Plan
that was established by this Act.
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Initially, the IRS was the primary
regulator of private pension plans. The Revenue Acts of 1921
and 1926 allowed employers to deduct pension contributions
from corporate income, and allowed for the income of the
pension fund's portfolio to accumulate tax free. The
participant in the plan realized no income until monies were
distributed to the participant, provided the plan was tax
qualified. To qualify for such favorable tax treatment, the
plans had to meet certain minimum employee coverage and
employer contribution requirements. The Revenue Act of 1942
provided stricter participation requirements and, for the
first time, disclosure requirements.
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The U.S. Department of Labor became
involved in the regulation of employee benefits plans upon
passage of the Welfare and Pension Plans Disclosure Act in
1959 (WPPDA). Plan sponsors (e.g., employers and labor unions)
were required to file plan descriptions and annual financial
reports with the government; these materials were also
available to plan participants and beneficiaries. This
legislation was intended to provide employees with enough
information regarding plans so that they could monitor their
plans to prevent mismanagement and abuse of plan funds. The
WPPDA was amended in 1962, at which time the Secretary of
Labor was given enforcement, interpretative, and investigatory
powers over employee benefit plans to prevent mismanagement
and abuse of plan funds. Compared to ERISA, the WPPDA had a
very limited scope.
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The goal of Title I of ERISA is to protect
the interests of participants and their beneficiaries in
employee benefit plans. Among other things, ERISA requires
that sponsors of private employee benefit plans provide
participants and beneficiaries with adequate information
regarding their plans. Also, those individuals who manage
plans (and other fiduciaries) must meet certain standards of
conduct, derived from the common law of trusts and made
applicable (with certain modifications) to all fiduciaries.
The law also contains detailed provisions for reporting to the
government and disclosure to participants. Furthermore, there
are civil enforcement provisions aimed at assuring that plan
funds are protected and that participants who qualify receive
their benefits.
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ERISA covers pension plans and welfare
benefit plans (e.g., employment based medical and
hospitalization benefits, apprenticeship plans, and other
plans described in section 3(1) of Title I). Plan sponsors
must design and administer their plans in accordance with
ERISA. Title II of ERISA contains standards that must be met
by employee pension benefit plans in order to qualify for
favorable tax treatment. Noncompliance with these tax
qualification requirements of ERISA may result in
disqualification of a plan and/or other penalties.
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Important legislation has amended ERISA and
increased the responsibilities of EBSA. For example, the
Retirement Equity Act of 1984 reduced the maximum age that an
employer may require for participation in a pension plan;
lengthened the period of time a participant could be absent
from work without losing pension credits; and created spousal
rights to pension benefits through qualified domestic
relations orders (QDROs) in the event of divorce, and through
pre-retirement survivor annuities. The Omnibus Budget
Reconciliation Act of 1986 eliminated the ability of employers
to limit participation in their retirement plans for new
employees who are close to retirement and the ability to
freeze benefits for participants over age 65. The Omnibus
Budget Reconciliation Act of 1989 requires the Secretary of
Labor to assess a civil penalty equal to 20% of any amount
recovered for violations of fiduciary responsibility.
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The department's responsibilities under
ERISA have also been expanded by health care reform. The
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)
added a new part 6 to Title I of ERISA which provides for the
continuation of health care coverage for employees and their
beneficiaries (for a limited period of time) if certain events
would otherwise result in a reduction in benefits. More
recently, the Health Insurance Portability and Accountability
Act of 1996 (HIPAA) added a new Part 7 to Title I of ERISA
aimed at making health care coverage more portable and secure
for employees, and gave the department broad additional
responsibilities with respect to private health plans.
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