US - Statutory reporting requirements for private pension plans lack "key information" that could better assist federal agencies in identifying and tracking plans over time and monitoring multi-employer plans, a new report by the Government Accountability Office (GAO) has found.
Basic plan information and details including assets and liabilities, insurance and financial transactions is reported by private pension plans on the Form 5500. The information is used by the Department of Labor, Internal Revenue Service and Pension Benefit Guaranty Corporation primarily as a compliance tool to identify actual and potential violations of ERISA (Employee Retirement Income Security Act of 1974) and the Internal Revenue Code.
“Despite the efforts of Labor, IRS and PBGC to improve its content, the Form 5500 lacks key information,” the report - Private Pensions: Government Actions Could Improve the Timeliness and Content of Form 5500 Pension Information - stated.
“The form still lacks key information that could better assist Labor, IRS and PBGC in identifying and tracking all plans over time and monitoring multi-employer plans. Federal and private sector researchers also told us the form could collect better plan financial information, such as 401(k) plan fees. In addition, federal agency officials told us certain information could be reported earlier than the current filing deadline, such as information on a plan’s funding status, as well as its assets and liabilities.”
Bradley Belt, PBGC executive director, said: “When pension plans are underfunded, they need to be replenished with real dollars, not with phantom ‘credit balances’. Current-law ‘smoothing’ practices make pension plans look financially healthier than they really are. The GAO report confirms what we have been saying all along: the rules must be changed to ensure that companies keep the pension promises they have made to their workers.”
Democrat representative George Miller said the findings confirmed the need for serious reform of private sector pensions.
“If the law let companies shortchange their pension plans by billions of dollars during the boom of the late 1990s, then clearly the law fails to protect American workers and retirees,” he said.
“While this report once again documents the huge pension funding shortfall, it is unfortunate that the GAO was denied access to specific companies’ confidential filings with the PBGC. This information should be made public so that neither workers nor taxpayers are in the dark about the true financial condition of these pension plans.”
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