DOL to increase DB audits
The regulatory benefit landscape has some changes on the horizon.
A hot topic coming out of the Department of Labor is the agency’s plan to audit DB pension plans to ensure plan sponsors are getting benefits paid out to terminated vested participants, says Norma Sharara, a principal in Mercer’s employment practices risk management group.
It’s something “completely new” that started as a pilot program out of the Philadelphia DOL office, Sharara noted Thursday on Mercer’s Washington Outlook webcast.
While it sounds beneficial to many, “the bad news is that plan sponsors aren’t happy because the DOL views not contacting people entitled to benefits as being a plan sponsor breach of fiduciary duty,” she warned.
In the DOL’s view, not contacting totally vested participants early and periodically to inform them they are not entitled to benefits is a breach of the plan sponsors duty to provide benefits, Sharara said.
For a scope on the initiatives effect, the Philadelphia office alone between October 2016 and August 2017 found $165 million in benefits that were paid out to eligible participants.
The agency announced at a recent ERISA Advisory Council meeting it would be releasing guidance at some point. In the meantime, Sharara suggested following some best practices EBSA acting director, Tim Hauser, mentioned at the meeting.
· Send participants a certified letter using their last known address — “certified” being the key word, Sharara added.
· Keep good records on how to reach plan participants and pass those records onto successors during a M&A.
· Contact coworkers and ask if they know how to get in touch with plan participants.
· Try using phone numbers and not just addresses, as people tend to keep their cell phone numbers even when they move, Sharara added.