Harkin, Miller, Neal, Levin, Warren ask GAO to review system of private sector pension plan reporting and disclosure
WASHINGTON, D.C.—A report released at the request of Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee and Rep. George Miller (D-CA), senior Democrat on the House Education & the Workforce Committee—along with Rep. Richard E. Neal (D-MA), Rep. Sandy Levin (D-MI), and Senator Elizabeth Warren (D-MA)—found that the government agencies responsible for overseeing private-sector pension plans could take steps to improve reporting and disclosure requirements for plan participants and for the agencies alike. The members requested the report in order to examine existing pension reporting and disclosure requirements and to determine whether they could be improved for beneficiaries and government agencies alike.
The report found that retirees with vested benefits in a former employer’s plan may receive misleading or confusing information about their plans due to an existing split in responsibility amongst the Department of Labor, the IRS, and the Social Security Administration for managing plan data. The report also found that private sector plan participants, as well as government agencies, may receive more accurate information from plan sponsors if plan sponsors are provided with a well-organized, complete guide to reporting and disclosure requirements. Finally, the report found that plan sponsors and government agencies could take steps to improve the readability and clarity of required disclosures, so that plan participants can better understand them.
“As more Americans plan for retirement, we need to ensure that they have clear and easy-to-understand information about their pensions,” Harkin said. “This new GAO report highlights the need to update and simplify the reporting process. Streamlining communication between employers, government agencies, workers, and retirees would be a major step forward and would go a long way toward making retirement plans clearer and more transparent for the millions of families who rely on them for a secure retirement.”
“It is critical that workers and retirees receive timely and understandable information about their employee benefits so that they can better protect their financial futures. Congress and the relevant agencies should make it a priority to simplify and improve this system for everyone,” Miller said.
“It is my hope that the Congress and the Administration take this report into consideration, and makes the necessary changes to improve our retirement system. It is imperative that we are doing all we can to make it easier to make it easier for Americans to save for their retirement. This includes making any and all pension reports and disclosures as clear, concise and understandable as possible. Improving retirement security and expanding coverage to all Americans is one of the most important issues we face,” Neal said.
“Private pensions are an important part of our retirement system, and people deserve to have clear and accurate information about their plans,” said Warren. “This GAO report shows that the federal government can do a much better job making sure families have access to the information they need to make the right decisions as they plan for retirement.”
“The private sector pension system in the United States represents trillions of dollars in assets and is a key source of financial security for millions of Americans,” GAO wrote. “To promote transparency and enhance retirement security, legislation and regulations require that plan sponsors provide numerous reports to Labor, IRS, and PBGC, and numerous disclosures to plan participants.” According to GAO, the agency examined the reports and disclosures pension plans are required to make to government agencies and plan participants; the ways, if any, reports to agencies may be inefficient or ineffective, and the ways, if any, disclosures to participants may be inefficient or ineffective.
GAO’s report recommends that Congress consider shifting responsibility and necessary resources to the Department of Labor for managing the pension benefit data that Social Security Administration (SSA) provides to retirees. GAO also recommends that the agencies improve their online tools on reporting requirements and facilitate better readability of disclosures.
Read the GAO report here.