2002 Annual Performance Plan

Introduction

The goals and measures contained in Employee Benefits Security Administration's Annual Performance Plan for Fiscal Year 2002 support those contained in the Employee Benefits Security Administration Fiscal Year 1999 - 2004 Strategic Plan, specifically, the department's second strategic goal:  A Secure Workforce.  Employee Benefits Security Administration's primary mission is to protect the pension, health and other employee benefits of the over 150 million participants and beneficiaries in private sector employee benefit plans in excess of 6 million plans and $4.8 trillion in assets.  Through its program, Employee Benefits Security Administration safeguards and promotes the economic security of workers and families.  To accomplish this, Employee Benefits Security Administration has established the following agency goals:

• Facilitate compliance by plan sponsors, plan officials, service providers and other members of the regulated community.  Employee Benefits Security Administration facilitates compliance through the timely issuance of advisory opinions, exemptions, regulations, compliance guides and other issuances designed to assist the regulated community in understanding and complying with their responsibilities under the law, while removing unnecessary impediments and protecting the rights and benefits of participants and beneficiaries.  These efforts are supplemented by Employee Benefits Security Administration participation in conferences, symposia, and programs designed to expand an understanding of Employment Income Security Act of 1974’s compliance requirements.

• Deter and correct violations of the relevant statutes.  Employee Benefits Security Administration deters and corrects violations of the relevant statutes by identifying civil violations and achieving appropriate correction in a cost-effective manner (i.e. voluntary compliance, administrative proceedings or federal court action); detecting, investigating and referring criminal violations to prosecutorial authorities; ensuring that annual reports are filed timely and accurately; and ensuring that audits of employee benefit plans comply with professional standards.  

• Assist workers in understanding their rights and protecting their benefits.  Employee Benefits Security Administration assists workers in understanding their rights and protecting their benefits by disclosing plan documents; developing publications, news releases, and other educational materials which inform participants of their rights and responsibilities under Federal law; assists in the development of amicus curiae briefs to further participant rights and benefits; and maintains a nationwide participant assistance program which provides written and telephone responses to participant problems and inquiries.

• Encourage the growth of employment-based benefits.   As one of the principal agencies with responsibility in the area of pension, health and other employee benefits, Employee Benefits Security Administration plays a leadership role in the development of retirement, health and employee benefits policy.  Employee Benefits Security Administration discharges its responsibilities in this area in a variety of forms including, but not limited to, maintaining an active research program; continuing its educational outreach efforts to help plan sponsors and participants understand their rights and obligations as well as the importance of and options for retirement savings and health care benefits; assisting the Administration, other Federal agencies (e.g. the Departments of Treasury and Health and Human Services, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation, among others) and the Congress in the development and/or review of legislative initiatives affecting employee benefits.

Agency Mission

The Employee Benefits Security Administration is responsible for the administration and enforcement of Title I of the Employee Retirement Income Security Act of 1974, as amended, in both civil and criminal areas.  Employee Benefits Security Administration is also responsible for enforcing sections 8477 and 8478 of the Federal Employees' Retirement System Act of 1986.  The primary mission of Employee Benefits Security Administration is to protect the pension, health and other employee benefits of the over 150 million participants and beneficiaries in private sector employee benefit plans.

The Employee Benefits Security Administration's appropriation is comprised of three budget activities:

• Enforcement and Compliance

• Policy, Regulation and Public Services

• Program Oversight

The Enforcement and Compliance activity conducts civil and criminal investigations, performs reviews to ensure compliance with the fiduciary provisions of Employment Income Security Act of 1974 and Federal Employees' Retirement System Act of 1986, and assures compliance with applicable reporting requirements, as well as accounting, auditing, and actuarial standards.  This activity seeks the restoration of plan losses, removal of plan fiduciaries and/or prosecution of fiduciaries and others that result from violations of Employment Income Security Act of 1974 and applicable criminal Statutes, assesses civil penalties under Employment Income Security Act of 1974, and conducts quality reviews of plan accountants' work papers.  It also conducts liaison activities with the Financial Accounting Standards Board and the American Institute of Certified Public Accountants, including referrals of deficient accountants' work.

The Policy, Regulation and Public Services activity conducts policy, research and legislative analysis on pension, health, and other employee benefit issues; promulgates regulations and interpretations regarding reporting and disclosure, fiduciary, and coverage provisions; issues individual and class exemptions from Employment Income Security Act of 1974's and Federal Employees' Retirement System Act of 1986's prohibited transactions provisions; discloses legally-required reports; provides technical assistance to plan officials, employee benefits practitioners, and the general public; provides direct assistance to plan participants and beneficiaries in enforcing their rights under Employment Income Security Act of 1974 and in obtaining benefits under employee benefit plans; and provides assistance in response to requests from members of Congress (including constituent requests), as well as technical assistance to about a dozen legislative committees with jurisdiction affecting Employment Income Security Act of 1974 and Federal Employees' Retirement System Act of 1986.

The Program Oversight activity provides leadership, policy direction, strategic planning, and management of the pension and welfare benefits program.  Oversight and operational guidance is provided in the areas of financial management, budget formulation and execution, debt management, human resource management, labor and employee relations, employee development and other administrative activities.  In addition, this activity conducts a comprehensive technical training program, for both new and seasoned employees, in support of the agency's enforcement, policy, legislative, and regulatory functions.

Goals and Measures

Departmental Goal #1 - A Secure Workforce (Promote the economic security of workers and families).

Agency Strategic Goal - Facilitate compliance by plan sponsors, plan officials, service providers and other members of the regulated community.

Strategies to Achieve Goals - Continue monitoring the new Form 5500 processing system which was implemented in Fiscal Year 2000 that promotes the electronic filing of the annual reports to further streamline the system and reduce the cost and burden of filing, as well as the cost of operating the system.  The reports are filed annually by employee benefit plans to provide information about plan operations to plan participants and the regulatory agencies.  The new system will streamline the process for converting Form 5500 data into electronic format and yield more accurate and timely data for enforcement targeting, public disclosure, research and policy development.

Increase compliance of benefit plan filings and related audits by:

• Educating filers through a filer Help Desk, clearer Form 5500 instructions, enhanced Web pages, and printed forms

• Refining computerized edit tests and corrective correspondence

• Expanding outreach with the American Institute of Certified Public Accountants and State Certified Public Accountant societies to educate and provide technical guidance to plan auditors

• Imposing penalties for deficient audits

• Referring significantly deficient professional audit work to the American Institute of Certified Public Accountants and State licensing authorities for disciplinary action.  Since small Certified Public Accountant firms often have little Employment Income Security Act of 1974 expertise, technical assistance will be particularly focused on them. A toll free number assists users in becoming familiar with the Form 5500 and decreases the number of filing errors.

Provide individual technical assistance to target audiences (employers, unions, fiduciaries, accountants, actuaries, attorneys, third-party administrators, workers and their dependents) by participating in conferences, symposia and programs designed to expand an understanding of Employment Income Security Act of 1974's compliance requirements.  Web and satellite broadcasts will be utilized to reduce participant costs.

Provide appropriate, responsive and cost-effective regulatory framework and interpretive guidelines for private-sector employee benefit plans which minimize regulatory and administrative burdens with respect to the statutory and regulatory requirements.

Process exemption requests under Title I of Employment Income Security Act of 1974 in a timely manner, establishing effective conditions and safeguards to protect plans, participants and beneficiaries and facilitating meritorious transactions that would otherwise be prohibited.

Departmental Goal #2 - A Secure Workforce (Promote the economic security of workers and families).

Agency Strategic Goal - Deter and correct violations of the relevant statutes.

Strategies to Achieve Goals - Enforcement activities are perhaps the most prominent activities and consequently, are where the vast majority of resources are devoted.  However, underlying the enforcement program is a whole array of activities that support our Deter and Correct performance measure.  They include technology enhancements, compliance assistance and education, and traditional enforcement activities.

Compliance Assistance - Increasing compliance of benefit plan filings and related audits by:

• Educating filers via a filer Help Desk

• Refining computerized edit tests and corrective correspondence

• Expanding outreach with the American Institute of Certified Public Accountants and State Certified Public Accountant societies to educate and provide technical guidance to plan auditors

• Imposing penalties for deficient audits

• Referring significantly deficient professional audit work to the American Institute of Certified Public Accountants and State licensing authorities for disciplinary action.  Since small Certified Public Accountant firms often have little Employment Income Security Act of 1974 expertise, technical assistance will be particularly focused on them.  As the redesigned Form 5500 employee benefit plan annual filing is implemented, users will need additional help in becoming familiar with the new form to avoid an increased error rate.

Promoting the formal voluntary compliance program through which fiduciaries who have found problems with their plans can seek assistance and/or approval in taking corrective action.  This will particularly benefit small employers who otherwise might not take the corrective actions necessary to come into compliance.

Continuing to develop and refine compliance guides for our customer service staff in Employee Benefits Security Administration field offices to assist them in handling inquiries and ensure that American workers and their families receive the important protections afforded under Health Insurance Portability and Accountability Act of 1996 and other recently enacted health care laws.

Providing individual technical assistance to target audiences (employers, unions, fiduciaries, accountants, actuaries, attorneys, third-party administrators, workers and their dependents).

Supporting the department’s cross-cutting initiatives pertaining to Coordinated Compliance Assistance for Small Businesses and One-Stop Centers for Education and Outreach.

Educating the pension and welfare benefits community as to the problem areas that we have uncovered in our investigations and the standards for compliance with Employment Income Security Act of 1974.

Enforcement - Employee Benefits Security Administration will pro-actively enforce existing and future regulations as a means for deterring and correcting violations of Employment Income Security Act of 1974.  Strategies include:

• Continuing to target and investigate pension plan violations where participants are susceptible to actual loss of benefits, or populations of plan participants who are potentially exposed to the greatest risk of falling victim to unlawful conduct. 

• Identifying civil violations and achieving appropriate correction in the least obtrusive and most cost-effective manner.

• Strategic targeting and investigating of cases where meaningful monetary or injunctive relief can be obtained.  When alternative methods are available to prevent, redress, or punish violations, in general, preference will be given to options which will result in the most timely remedial action and the most efficient use of agency resources.

• Referring evidence of criminal activity, whether or not pursued by Employee Benefits Security Administration, to the appropriate United States Attorney's office or to the appropriate state's attorney's office.

• Correcting abusive practices by service providers and financial institutions who offer a variety of administrative, financial, consulting, and other types of services to employee benefit plans enabling Employee Benefits Security Administration to leverage its enforcement resources.

• Continuing to be alert for new and emerging threats to employee benefit plans and plan participants.

Enforcing the new health care provisions contained in the new part 7 of Employment Income Security Act of 1974, particularly Health Insurance Portability and Accountability Act, Newborns' and Mothers' Health Protection Act of 1996, Mental Health Parity Act of 1996, the Women's Health and Cancer Rights Act of 1998.  The ongoing responsibilities of Employee Benefits Security Administration in this area include developing comprehensive regulations, interpretive bulletins, opinions, rulings, and model forms and providing training, technical assistance and other guidance at the State and Federal level to facilitate compliance with and enforcement of the health care portability, non-discrimination and other provisions of Title I of Employment Income Security Act of 1974 relating to group health plans.  In satisfying these responsibilities Employee Benefits Security Administration coordinates closely with the Department of Health and Human Services through an ongoing interagency working group and the Department of the Treasury.

Refining our investigative aid to assist investigators in reviews of health plans to determine whether there is compliance with the new health care laws.  Employee Benefits Security Administration investigators are currently implementing a nationwide enforcement pilot project to test the investigative aid and how it can best be used in future investigations of health plans to ensure that workers and their families are not unjustly denied any protections provided under Health Insurance Portability and Accountability Act of 1996 and other related health care provisions.

Technology - Employee Benefits Security Administration has and continues to take advantage of state-of-the-art technologies as a means for achieving more efficient and effective program delivery.  They include:

• Continuing to refine the new processing system outside the IRS for Form 5500 Annual Report.  The reports are filed annually by employee benefit plans to provide information about plan operations to plan participants and the regulatory agencies.  The new system will streamline the process for converting Form 5500 data into electronic format and yield more accurate and timely data for enforcement targeting and public disclosure.

• Promoting the electronic filing of the annual reports to:

  • Reduce the cost and burden of filing

  • Reduce the cost of operating the system

  • Provide more timely reports as a means for facilitating enforcement and disclosure activities

• Developing a system to disclose Form 5500 annual reports via an Internet site to make data more readily available to participants and to the agencies which use it to protect employee benefits.  The use of the Internet for disclosure will provide U.S. Department of Labor with the technology it needs to enhance its customer service.

Departmental Goal #3 - A Secure Workforce (Promote the economic security of workers and families).

Agency Strategic Goal - Assist workers in understanding their rights and protecting their benefits.

Strategies to Achieve Goals - Assisting workers and conducting outreach and education activities are perhaps the most ubiquitous of activities yet are an integral part of achieving Employee Benefits Security Administration's mission in a cost effective manner.  The tangible outcomes, however, are the most difficult to measure.  Nevertheless, Employee Benefits Security Administration strongly advocates that meaningful education, outreach, and assistance results in positive dividends such as earlier detection of potential violations, protection and/or restoration of assets or benefits to participants, and increased coverage rates.  Some of the strategies utilized include:

• Continuing to implement a new health education campaign to:

  • Raise public awareness about where to seek assistance about their rights

  • Educate workers and their employers about health plans

  • Provide individual technical assistance to workers who have questions about their health benefits or need assistance in obtaining those benefits

  • Provide information to employers and plan sponsors about their responsibilities under the law.

• Maintaining the Federal-State-local partnership to educate employee benefit plan participants who are at risk (such as, dislocated workers who face job loss and associated benefits losses) in understanding not only their rights under Employment Income Security Act of 1974, Consolidated Omnibus Budget Reconciliation Act, Health Insurance Portability and Accountability Act of 1996, etc. but also how their employment status may affect their pension and health benefits.  We work with the state Dislocated Worker Units which are funded by Employment Training Administration under Job Training Partnership Act, Title III.

In addition, Employee Benefits Security Administration will coordinate with Employment Training Administration to support the education and assistance to dislocated workers on pension and health issues.

Providing individualized participant assistance (information concerning their rights, help in seeking benefits or an explanation of why they are not entitled to benefits, an explanation of how the law applies and, in appropriate cases, make inquiries on their behalf).

Providing a prompt and courteous response to all benefit complaints filed with us and, when requested, furnish the complainant with an understandable explanation of the outcome or our review and investigation.

Activities

Resources, Operations and Processes - The budget request reflects Employee Benefits Security Administration's program to effectively address the department's responsibilities in protecting plan participants' retirement, health care, and other benefits.  There are over 6 million private employee benefit plans, which cover approximately 150 million people, including workers, their families, and retirees, and control approximately $4.8 trillion in assets.  Employee Benefits Security Administration's comprehensive and coordinated enforcement strategy is designed to:

• Ensure that annual reports are filed timely and accurately

• Ensure the highest quality independent Certified Public Accountant audits of employee benefit plans

• Identify civil violations and prevent loss or achieve appropriate correction in the least obtrusive and most cost-effective manner, i.e. voluntary compliance, administrative proceedings or Federal court action

• Detect, investigate and refer criminal violations to prosecutorial authorities.  Employee Benefits Security Administration's enforcement strategy will continue to be implemented through increased and decentralized investigatory activity, reporting and compliance efforts, and improvement of employee productivity and information sharing through training and technology.

In the area of Federal Employees' Retirement System Act of 1986 audits, the statute provides that the Secretary of Labor will establish a program to carry out fiduciary compliance audits.  The Thrift Savings Plan has experienced phenomenal growth since its inception.  Without effective U.S. Department of Labor oversight of the Thrift Savings Plan, the Thrift Investment Board would have little capacity for gaining information on behalf of the Thrift Savings Plan participants and beneficiaries about how policy is applied in practice and the impact of the fiduciary decisions.  In addition, the Thrift Savings Plan is slated to add two new funds B an international and small cap C and transition to a daily valued rather than monthly valued system adding that much more complexity.

The agency will continue to develop and implement state-of-the-art technology systems which will strengthen enforcement capabilities and improve customer service in order to assist plan participants in obtaining earned benefits.  Work will also continue to refine our new processing system which will be devoted exclusively to processing Form 5500 Series annual employee benefit report filings.  This new system improves the quality and accuracy of processed data, speeds its use in safeguarding benefits, and is less costly to operate, yielding a substantial long-term savings to the Federal government.

$500,000 will be dedicated to cover the costs associated with providing, when necessary, independent fiduciary services to handle termination and distribution issues related to plans that have been abandoned, otherwise known as orphan plans.  The orphan plan initiative assists at-risk populations, specifically those participants who are in danger of losing some or all of their retirement savings.  In many orphan plan situations fiduciaries have deserted the plan and effectively abdicated their responsibilities.  As a result, participants are unable to exercise any rights they may have under the plan; plan assets are not being actively managed; individual participant accounts may not be credited accurately; and reports required to be filed are not prepared.  Indeed, in many instances there are insufficient assets in the plan to pay for the services of an independent fiduciary without significantly depleting the participants' accounts.

Resources, Operations and Processes - This activity's request for Fiscal Year 2002 is to maintain services in several important areas, including managing its participant assistance program to assure responsiveness to the increasing demand for pension and health benefits information and technical assistance by the general public; ensuring the timely provision of regulatory and interpretive guidance to the public and other governmental agencies; providing policy guidance and legislative efforts in the areas of pension coverage, portability, and preservation and health care access and security; and carrying out an effective research program directed toward pension and health care issues, providing both long-term and basic research studies and short-term studies with immediate policy applications.

The recent enactment of the health care laws significantly expanded U.S. Department of Labor's regulatory and interpretative responsibilities under Employment Income Security Act of 1974.  These new laws establish Federal requirements for virtually all of the nation's health benefit programs by adding new provisions to Employment Income Security Act of 1974, the Public Health Services Act and the Internal Revenue Code.  U.S. Department of Labor was assigned general authority and discretion to promulgate compliance guidance (rules, guidelines and regulations) and enforce provisions of the Act relating to employer-sponsored group health plans.  Specific U.S. Department of Labor rule making actions are required to assure that workers receive certification of prior benefit coverage so that benefits for pre-existing conditions are covered by new employers and insurers.  These new laws and the department's compliance guidance and interpretations there under potentially impact over 2.5 million group health plans, providing health care coverage to an estimated 125 million participants and beneficiaries, and benefit-related expenditures in excess of $250 billion.

In Fiscal Year 2002, the level of resources devoted to carrying out Employee Benefits Security Administration's compliance guidance activities and related functions will continue to increase.  This is the result of several related factors:

• The significant Federal health benefits statutes which create extensive on-going guidance, enforcement and assistance responsibilities for the Secretary of Labor

• The greater incidence of self-insurance which leaves Employee Benefits Security Administration with essentially sole jurisdiction over virtually all aspects of the operation of employment-based health plans due to Employment Income Security Act of 1974's broad preemption provisions

• The continued evolution of the structure and operation of the employment-based health care system toward complicated and sophisticated forms of managed care arrangements.

In addition, since the new laws affect most workers and most employers, the need for information will be significant.  Information will be provided to participants and beneficiaries to enable them to better understand and exercise their rights under the laws.  In addition, when possible, the staff assists the participants in recovering benefits to which they are entitled, but have been denied.  Employers and practitioners are also provided information that helps them understand and comply with the laws and associated rules and regulations.

This activity also reflects the $252,000 rescission pursuant to Public Law 107-342.

Resources, Operations and Processes - This activity's request for Fiscal Year 2002 was formulated within the context of its overall responsibilities in providing leadership, policy direction, strategic planning, and management of the pension and welfare benefits program.  In addition to policy direction and leadership, attention will continue to be focused upon human resource management, financial management, debt collection, the provision of administrative support to program operations, and implementation of the Government Performance and Results Act of 1993.  Professional staff development will continue to remain a high priority and is considered critical to maintaining the professional and technical skills of Employee Benefits Security Administration's employees in the rapidly evolving pension and health care benefits industry.  This activity also includes the one-time emergency preparedness funding of $1.6 million.

Validation of Supporting Performance Measure/Indicators

Employee Benefits Security Administration will obtain its performance reporting data from automated information and case reporting systems, managers' logs of program activities, accountability audits/reviews, and customer knowledge and satisfaction surveys.  The agency will review and refine these data sources on an ongoing basis.  Based upon the results of these reviews, Employee Benefits Security Administration will make adjustments or, if necessary, develop and implement alternative sources for the performance data.

In addition, the Office of Inspector General will conduct audits under the Chief Financial Officer's Act.  This strategy will include conducting, at various points during the course of the fiscal year, quality reviews of data bases that capture performance data and inspections of field offices to ensure the integrity and completeness of reported data.

In Fiscal Year 2000, Employee Benefits Security Administration embarked on an initiative, in partnership with the department, to improve its performance measures and to address performance data validation and reliability.  MRJ, a noted expert in the field of data validity and results-based management, assisted Employee Benefits Security Administration in transitioning from output to outcome measures.  Simultaneously, MRJ worked with Employee Benefits Security Administration management in reviewing its internal data controls as a means for ensuring the most reliable and accurate data to the extent practicable.  Employee Benefits Security Administration received a preliminary report in late Fiscal Year 2000.

In Fiscal Year 2001, Employee Benefits Security Administration participated for the first time in the Excellence in Customer Satisfaction initiative.  As a result, Employee Benefits Security Administration received a customer satisfaction index.  The initial effort focused on services provided by Employee Benefits Security Administration benefit advisers and provided information to assist Employee Benefits Security Administration's efforts in evaluating its program impact and strategies.  In partnership with the department and Gallup, Employee Benefits Security Administration also conducted a limited evaluation of certain targeted educational materials via focus groups.  Employee Benefits Security Administration anticipates a report in early Fiscal Year 2002.  This early effort at evaluating the materials is an effort to ascertain whether Employee Benefits Security Administration’s materials are helpful and understandable and provide the necessary information for individuals to make informed decisions about their retirement savings strategies.

In Fiscal Year 2002, Employee Benefits Security Administration, in partnership with the department, will embark on a program evaluation of its education and outreach, customer service, and enforcement strategies.  These three interrelated activities provide the backbone to many of Employee Benefits Security Administration's performance measures and provide valuable intelligence to Employee Benefits Security Administration's compliance assistance efforts.  These studies will provide valuable insight to which strategies are producing the most positive impact.  As a result, Employee Benefits Security Administration will be positioned to leverage its limited resources in the most effective and meaningful way.

Cross-Cutting Programs

In carrying out the department's Employment Income Security Act of 1974 and Federal Employees' Retirement System Act of 1986 responsibilities, U.S. Department of Labor coordinates its enforcement, policy, regulatory and public information programs with numerous Federal, state and local entities.

The U.S. Department of Labor has cross-cutting, multi-agency involvement in a number of program areas.  Under Employment Income Security Act of 1974, U.S. Department of Labor shares responsibility with the Internal Revenue Service and the Pension Benefit Guaranty Corporation.  Additionally, the broad sweep of our enforcement responsibilities requires coordination with financial institution regulatory agencies such as: Comptroller of the Currency, Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Security Exchange Commission, State insurance and financial regulatory entities, as well as the FBI, Office of the Inspector General, U.S. Postal Service and state and local law enforcement agencies.

Further, in order to fulfill policy, research, regulatory and public education responsibilities, Employee Benefits Security Administration works with the Departments of Health and Human Services and Treasury, the National Economic Council, the Bureau of the Census, the Bureau of Labor Statistics, the Thrift Savings Board, and the Small Business Administration.

Specific examples include Employee Benefits Security Administration's joint initiative with the Small Business Administration to expand pension coverage for women, minorities and small businesses; our ongoing coordination with Health and Human Services and Treasury on Health care policy and regulations; pension education initiatives, and coordinated enforcement approaches where Employee Benefits Security Administration works with Federal, state and/or local enforcement agencies.

In the international arena, Employee Benefits Security Administration provides assistance to ILAB, the World Bank, AID and foreign governments.  Employee Benefits Security Administration has provided seminars and technical assistance regarding retirement security issues to visiting officials from many countries.  This includes technical assistance regarding establishing private pension systems, developing policy, establishing legal structures to control the systems and creating and operating regulatory institutions.

Within U.S. Department of Labor, the Employee Benefits Security Administration participates in a number of U.S. Department of Labor cross-cutting programs.  Specifically, in Fiscal Year 2001, the new ERISA Filing Acceptance System Form 5500 reports processing system was implemented for the first full year.  This system made it easier for plan officials to file electronically by on-line transmission, CD-ROM, floppy disk or tape.  Further, Employee Benefits Security Administration established a customer service Help Desk operation to assist Form 5500 filers in properly completing the forms and in using the new filing system.  These initiatives are a component of the U.S. Department of Labor Improving Customer Service with Technology Cross-Cut.

In Fiscal Year 2000, Employee Benefits Security Administration participated in a number of cross cutting initiatives and will continue their coordinated assistance during Fiscal Year 2002.

Innovative Enforcement - The Voluntary Compliance for Fiduciary Breaches program will provide administrative procedures to assist plan officials, including small businesses, to correct inadvertent fiduciary violations and bring plans into compliance and restore assets to plans more quickly than through traditional enforcement actions.

One-Stop and Coordinated Compliance Assistance - Employee Benefits Security Administration will provide educational materials on health and pension issues for distribution to employers and employees and work with Employment Training Administration to provide further assistance, as necessary.  With respect to coordinated compliance assistance, once the program is established, Employee Benefits Security Administration will participate in a U.S. Department of Labor pilot project to bring coordinated compliance assistance on U.S. Department of Labor Programs to various field locations.

Dislocated Workers - Employee Benefits Security Administration will place special emphasis on educating and assisting the dislocated workers and will:

• Establish and maintain liaison with the department's regional Employment Training Administration staff to coordinate services for workers effected by plant closures or reductions in force

• Provide technical assistance to State Bureaus of Employment Service or State Workforce development Cabinets and all unemployment insurance offices who assist dislocated workers

• Coordinate with the regional workers Adjustment Retraining Notification Act program

• Work with the AFL-CIO to provide dislocated worker services

• Provide assistance to Employment Training Administration's one stop shop program with regard to dislocated worker services.

Finally, in Fiscal Year 2002, Employee Benefits Security Administration will continue working with the department in structuring an overall, one U.S. Department of Labor, IT environment as a means for fully integrating the department.  In addition, Employee Benefits Security Administration will be an active partner in the department’s overall program evaluation cross-cut.

Key External Factors that May Affect Achievement of Goals

Numerous external factors may ultimately influence Employee Benefits Security Administration's ability to achieve its goals such as structure and health of the economy, composition and level of employment, economic growth, and sectoral shifts in economic activity.  With respect to demographics, there are additional external factors influencing Employee Benefits Security Administration's mission such as the aging population, increasing representation of women and minorities in the workforce, and the increasing percentage of workers in small businesses.  Finally, with respect to the industry itself, the continuing evolution in the types of employee benefit plan sponsors (different types necessitate different approaches and strategies to accomplish the goals) and the evolution of the health care services industry (changes in financial arrangements between plan sponsors and providers create new issues that need to be addressed to achieve the goals) will continue to challenge Employee Benefits Security Administration.  Similarly, medical cost inflation can cause employers to drop or restrict health coverage and also to pass more of the cost on to participants.  Finally, the increased prevalence of self-insured health plans (preemption of state law by Employment Income Security Act of 1974 brings all aspects of health benefits regulations within Employee Benefits Security Administration's jurisdiction) and the volatility of financial markets (new financial products require us to address different issues and the numbers and types of compliance issues increase with market volatility.) will challenge Employee Benefits Security Administration and impact its efforts.

Strategic Management of Human Capital

Introduction - The Employee Benefits Security Administration continues to focus on human capital management as a way to build, sustain, and effectively deploy the skilled, knowledgeable, diverse, and high-performing workforce needed to meet current and emerging needs.  This is particularly important to ensure the availability of well-qualified employees who are prepared to step into leadership positions over the next five years.

Challenges - Like many Federal agencies, a significant number of Employee Benefits Security Administration’s supervisors and senior managers are eligible to retire within the next five years.  Eighty percent of the Regional Directors will be eligible for retirement during this period.  These are critical senior leadership positions. The retirement of these officials would have a major impact on the accomplishment of the agency’s mission if well-qualified candidates were not available to replace them.

In addition, seventy-five percent of Employee Benefits Security Administration’s District Supervisors are eligible to retire within the next five years.  District Supervisors manage district offices in Employee Benefits Security Administration’s largest regions.  The loss of these individuals would also have a significant impact on the accomplishment of Employee Benefits Security Administration’s mission if not replaced by well-qualified candidates.

In addition to the District Supervisors and Regional Directors who are eligible to retire within the next five years, thirty-two percent of Group Supervisors in the field will be eligible to retire during the same period.  These first line supervisors are the backbone of Employee Benefits Security Administration’s compliance and enforcement operations.

In the national office, thirty-three percent of Employee Benefits Security Administration’s Office Directors will be eligible to retire within the next five years.  These individuals provide executive leadership within Employee Benefits Security Administration and are responsible for developing agency policy, issuing exemption determinations, and ensuring reporting compliance with Employment Income Security Act of 1974.  Again, we must have highly qualified replacements ready to step in as necessary.

In addition to the large number of supervisors and managers who are eligible to retire within the next five years, during the past several years, Employee Benefits Security Administration has experienced a high rate of employee turnover in its major occupations.  This problem is particularly significant in the field.  Many of these employees are leaving after the agency has invested significant resources into their development.  During Fiscal Year 2000 and Fiscal Year 2001, an average of seven percent of Employee Benefits Security Administration’s investigators/auditors left the agency after working at least one year.  These are front line workers who the agency depends on to carry out the day-to-day operation of its mission.  However, analysis of Fiscal Year 2001 data indicates that overall attrition has dropped significantly.

Addressing Human Capital Challenges - Employee Benefits Security Administration is acutely aware of the human resource management challenge it faces.  For several years the agency has strategically focused on these challenges and undertaken a number of initiatives to ensure that the right people are in the right place at the right time. Below are some of the activities Employee Benefits Security Administration has undertaken.  We also plan to use human resource management flexibilities to stem the flow of employees leaving investigator/auditor positions after one or more years of employment.

External Training - Employee Benefits Security Administration has made extensive use of the U.S. Office of Personnel Management supervisory and executive development programs.  Annually, Employee Benefits Security Administration sends non-supervisors, supervisors and other managers to U.S. Office of Personnel Management’s supervisory and executive development programs.  The centers offer courses in leadership, team building, diversity, performance-based and results management, and supervision.  The knowledge and skills acquired from these courses are invaluable to the participants and make them competitive for future leadership positions.  We know from reviewing past results that employees who have attended the training programs frequently have progressed to supervisory and managerial positions in Employee Benefits Security Administration.  These programs are highly regarded by those who attend.

In fiscal year 2001, thirty-five Employee Benefits Security Administration employees attended the Management Development Centers sponsored by U.S. Office of Personnel Management at a cost of $117,000, excluding travel expenses.  In fiscal year 2002, forty-seven employees are scheduled to participate at a cost of $148,000.

Internal Training - Employee Benefits Security Administration conducts an extensive in house technical training program. In fiscal year 2001, Employee Benefits Security Administration contracted with Job Performance System, Inc., to design a training needs assessment and make recommendation on how Employee Benefits Security Administration could improve its in training program.  This assessment provided Employee Benefits Security Administration with sound recommendations on improving its training program.  In particular, the assessment identified three skills gaps for Investigators/Auditors with less than five years of work experience:

• Interviewing

• Laws related to Employment Income Security Act of 1974, e.g., Health Insurance Portability and Accountability Act of 1996 and Consolidated Omnibus Budget Reconciliation Act

• Auditing

The assessment identified two skills gaps for Benefits Advisor:

• Knowledge of Employment Income Security Act of 1974

• Laws related to Employment Income Security Act of 1974, e.g., Health Insurance Portability and Accountability Act of 1996 and Consolidated Omnibus Budget Reconciliation Act

These finding were shared with Employee Benefits Security Administration senior management officials in the National and Regional Offices.  The agency is currently evaluating comments from these managers and has begun implementing recommendations as appropriate.

Long Term Career Development Assignments - These assignments can be broken down into two categories – executive potential and executive leadership.  Each program lasts approximately one year.  The executive potential program is available to supervisory employees who demonstrate executive management potential.  Employees selected for this program must complete two sixty-day rotational assignments outside Employee Benefits Security Administration.  These rotational assignments give employees exposure to the operations of other Federal or state agencies.  In some cases, the employee may work in a private sector organization during one of the rotational assignments.  There is also formal training, shadowing, etc.

The executive leadership program is designed primarily for journeyman level employees who demonstrate supervisory potential.  Employees selected for this program conduct research on management and work related issues, prepare group reports and shadow supervisory and management officials in their daily work.  They also complete two rotational assignments.  One of these assignments must be for sixty days and the other thirty days.

Over the past several years, Employee Benefits Security Administration has supported nine employees in these assignments.  Two individuals who were GS-11/12 when they participated in this program have been promoted to the GS-13 grade level.  Another individual who was a GS-11/12 employee in the Boston Regional Office when she participated in this program has been promoted to a GS-14 position in Washington, DC.

Short Term Career Development Assignment - A few years ago, the Deputy Assistant Secretary for Program Operations established a Special Assistant position in his immediate office to provide journeyman level employees with an opportunity to work on projects at the highest level in the agency.

Since its inception, fourteen employees have completed a rotational assignment with the Deputy Assistant Secretary for Program Operations.  Of these, five have either been selected for supervisory or other management positions on a permanent or acting basis.  For Fiscal Year 2002, the Deputy Assistant Secretary will select five candidates for this program.  Employee Benefits Security Administration has also established a similar rotational program involving regional offices.  The Employee Benefits Security Administration San Francisco Regional Office is the first to participate in this program.

Senior Executive Service Candidate Development Program - The U.S. Department of Labor has an Senior Executive Service candidate development program of which Employee Benefits Security Administration is an active participant. This program lasts approximately eighteen months and includes rotational assignments inside and outside the U.S. Department of Labor.  A Employee Benefits Security Administration employee who was selected for the program has completed all requirements and is now eligible for a noncompetitive appointment to a position in the senior executive service.

Student Loan Repayment Program - Employee Benefits Security Administration is currently planning to implement a student loan repayment program as one vehicle to attract and retain valuable employees.  Because the retention problem is more significant in certain field offices, the plan is to establish a pilot program. If this program proves successful, it may be implemented Employee Benefits Security Administration-wide.

Delegation of Human Resource Management Flexibilities - In order to provide National and Regional Office Directors additional tools to recruit well-qualified candidates for Employee Benefits Security Administration major occupations, the Deputy Assistant Secretary for Program Operations has re-delegated authority to National and Regional Office Directors to approve certain human resource flexibilities as incentives to attract qualified candidates.  These incentives include the authority to approve advance in pay, superior qualification appointments and payment of travel expenses for interviews.

Recruitment - To better recruit well-qualified candidates, Employee Benefits Security Administration established recruitment teams in the National and Regional Office.  Each National Office and Regional Office component designated an individual who would facilitate recruitment for major occupations.  Recruitment team members attend a variety of job fairs; visit college campuses and other events where applicants with the necessary skills to do the work of the organization are available.  Recruitment teams members can access a group e-mail address to alert other team members about their recruitment activities and share information about the best sources of candidates.

In addition to recruitment teams, Employee Benefits Security Administration is beginning to advertise its vacancies on the Internet.  We have begun to utilize BenefitsLink.com to advertise senior management and specialized positions.  Based on our preliminary review of the visits to our advertisements, we believe this medium offers a very good recruitment source for future job advertisements.

Linking the Strategic Management of Human Capital - The Employee Benefits Security Administration strategic and performance goals support the U.S. Department of Labor’s strategic Goal 2 – A Secure Workforce.  In particular, Employee Benefits Security Administration supports the outcome goals of:

• Increase compliance with worker protection laws

• Protect worker benefits

Employee Benefits Security Administration has developed four strategic goals in support of the department’s outcome goals above:

• Facilitate compliance by plan sponsors, plan officials, service providers and other members of the regulated community

• Deter and correct violations of the relevant statutes

• Assist workers in understanding their rights and protecting their benefits

• Encourage the growth of employment-based benefits

When taken together, the human capital activities being undertaken by Employee Benefits Security Administration in the areas of training, employee development, recruitment, retention and succession planning play a critical role in accomplishing Employee Benefits Security Administration’s strategic and performance goals.  For example, the training needs assessment survey pointed out additional areas of focus to better prepare employees to perform their job.  New Investigators/Auditors and those with less than five years of work experience will receive additional training in interviewing techniques, auditing and laws related to Employment Income Security Act of 1974.  This training, we believe, will facilitate the accomplishment of Employee Benefits Security Administration strategic goals 1 and 2.  Benefits Advisors will receive additional training on Employment Income Security Act of 1974 and related laws.  This training will help Benefit Advisors in assisting workers, and in their outreach and education activities.  Assisting workers and conducting outreach and education activities supports the accomplishment of Employee Benefits Security Administration strategic goals 3 and 4.  By closing the identified skills gaps, Employee Benefits Security Administration employee will become more efficient and productive, thereby, providing better service workers and employers.

As explained above, the executive development training will better prepare new supervisors and managers in the management of performance-bases organizations.  They will receive GRPA related training earlier so that when the time comes to replace senior managers who retire within the next five years, these individuals will possess invaluable skills in results based performance management.

Conclusion - Employee Benefits Security Administration has identified the human resource management challenges it will face within the next five years and is developing the supervisory and management skills of the employees who will assume supervisory and management responsibilities in the future.  In addition to developing a pool of well-qualified candidates internally, Employee Benefits Security Administration will also recruit well-qualified external candidates.  Also, the utilization of the human resource flexibilities and recruitment teams will improve Employee Benefits Security Administration’s recruitment and retention of well-qualified candidates.  The proactive steps Employee Benefits Security Administration is taking now to attract and/or develop internal and external candidates will ensure that the right people are in the right place at the right time and that the systems are in place to meet these challenges.  The activities above have been linked with Pension and Welfare Benefits Administration’s strategic and performance plans to ensure that Employee Benefits Security Administration has high performing employees which leads to a high performing organization.

Finally, Employee Benefits Security Administration is utilizing existing resources to accomplish its human capital activities and producing tangible results and can link additional resources, if available, to producing more positive results.

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