Pension oversight boils down to you

Workers feeling uneasy about their retirement safety nets will find little comfort from a new government watchdog report that is critical of the Labor Department's enforcement of employer retirement-plan laws.

The Government Accountability Office criticizes the Employee Benefits Security Administration (EBSA), the Labor Department office charged with enforcing retirement-plan laws, for failing to fully implement enforcement upgrades that GAO recommended several years ago.


"Since our 2002 review, EBSA's enforcement program continues to use performance measures that generally focus on how well the agency is managing and using its resources rather than on its overall impact on the security of employee benefits," said the GAO report, which can be found at, along with EBSA's response.

The report does credit the administration with many improvements but said several weaknesses remain. Chief among them: It has not estimated the nature or extent of pension plans' noncompliance, which limits its ability to measure the effectiveness of its enforcement, the report said.


The agency also relies too heavily on often outdated workplace complaints, rather than random audits, to bring cases, the report charges.

Workers may be concerned about the findings of the report, and rightly so, said Michael E. Kitces, a financial planner with Pinnacle Advisory Group in Columbia.

"On some level this has to be a concern for consumers," Kitces said. In his work reviewing clients' employer-sponsored plans, Kitces said he has found problems from time to time.

Some employers have failed to make required company contributions to plans in difficult economic times, while others didn't deposit employee funds in 401(k) accounts in a timely manner, he said.

So what can an individual retirement saver do?

At a minimum, experts said, consider the GAO report as a reminder to educate yourself about the types of retirement plans you have at work. Are they 401(k) plans, 403(b) plans, profit-sharing, money purchase or defined-benefit pension plans? Each have different rules about what you're entitled to and what your employer must do to operate them.

Ask your benefits department for the summary plan description pertaining to retirement plans and ask for further explanations if that document is unclear.

Consider, too, if your plan has some red flags that might signal trouble, said Donald B. Trone, chief executive of Fiduciary 360, a firm in Sewickley, Pa., that performs studies on fiduciary issues and develops oversight tools for retirement-plan sponsors and boards. For example, does your company's retirement plan have an investment committee? Or is the head of the company the sole trustee? That is one of Trone's red flags.


Some others: Does the committee have an investment policy statement that spells out how the plan will select and monitor investments and manage expenses?

Is the plan full of fund choices with consistently above-average expense ratios?

Average expenses in the overall fund market have been dropping, according to Morningstar Inc. The data firm says a typical retail investor paid 0.93 percent in expenses for a U.S. stock fund in 2005, down from 0.99 percent in 2004.

Costs for big, institutional firms running large retirement accounts should be even more attractive, Trone said.

Have a retirement question? Write to, or via mail at Your Money, Chicago Tribune, Room 400, 435 N. Michigan Ave., Chicago, IL 60611. If your letter is selected we may include you and your question in a future column.