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May 18, 2004
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Recent allegations of corporate fraud, late trading, improper market timing,
and excessive fees have focused plan sponsors and other fiduciaries on their
responsibilities to the workers and retirees they are obligated to protect.
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Our own investigations have discovered a troubling lack of understanding
among some fiduciaries as to what their responsibilities are. And the rise
in litigation over these issues has created a window of opportunity for us
to educate a very receptive audience.
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A recent survey conducted by the investment advice firm Financial Engines
found that 73 percent of plan sponsors believe their fiduciary
responsibilities and liabilities have increased over the past 12 to 24
months.
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And only 48 percent of those plan sponsors surveyed believe they have a
clear understanding of their role as a fiduciary.
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Plan sponsors - particularly small and medium-sized employers –
frequently lack the expertise or resources necessary to address the
difficult questions posed by fiduciary responsibility.
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Our new fiduciary education campaign - “Getting It Right” - is
designed to address this problem head-on.
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The campaign aims to increase awareness and understanding of plan sponsors
and their service providers about their basic fiduciary responsibilities
when operating an employee benefit plan.
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Understanding your plan and your responsibilities
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Carefully selecting and monitoring service providers
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Making contributions on time
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Avoiding prohibited transactions, and
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Making appropriate disclosures to plan participants and
filing annual reports to the government on time
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The Department identified fiduciary education as a
significant issue in the wake of the corporate fraud scandals that unfolded
in 2001 and 2002. We asked our ERISA Advisory Council to study the issue and
make recommendations. They took testimony from over 20 witnesses,
representing a broad spectrum of stakeholders, and issued a report in
November of 2002.
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Based on their recommendations, we decided to develop a
fiduciary education campaign and followed up with in depth discussions with
interested parties to ensure that our materials addressed their questions as
well as the issues we had identified.
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Today, the Department is unveiling its Fiduciary Education Campaign kit
containing both new educational materials and updated existing publications
that better address the needs we identified through our outreach.
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These materials are in your packets and include:
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Meeting Your Fiduciary
Responsibilities
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Understanding Retirement Plan Fees
& Expenses
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Selecting an Auditor
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Reporting & Disclosure Guide
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Voluntary Correction Publication - outlining our Voluntary Fiduciary Correction Program and Delinquent
Filer Voluntary Compliance Program, as well as several IRS and PBGC
correction programs.
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As mentioned by Secretary Chao, we are working with five
key partner organizations on this Campaign:
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Society of Human Resource Management
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U.S. Chamber of Commerce
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National Federation of Independent
Business
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American Institute of Certified Public
Accountants
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Small Business Administration
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Four fiduciary education seminars will be offered in conjunction with our
partners this Fiscal Year:
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June 17 – Miami, FL
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July 29 – Columbus, OH
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September 8 – Burlington, MA
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September 23 – Phoenix, AZ
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These seminars will be conducted by staff from our
national and local regional offices.
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In addition, we will be providing these materials to
other interested groups for distribution and to Congressional offices.
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Finally, a dedicated web page with all the materials has
been launched on our web site.
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Compliance assistance and strong enforcement of our laws
and regulations go hand in hand.
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Fiduciaries play a critical role under ERISA. They are
stewards of workers’ retirement savings. They are also the first line of
defense against wrongdoing.
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We owe a duty to America’s workers, retirees and their
families to assist fiduciaries in meeting their obligations.
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The “Getting It Right” campaign is a critical
component of the Bush Administration’s commitment to improving retirement
security.
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Thank you for your interest in this program and I hope
you will help us raise awareness of the campaign.
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