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View More Press Releases by PWBA [U.S. Department of Labor, Pension and Welfare Benefits Administration]

Press release:

Labor Department Finalizes Rule To Improve Security Of Small Pension Plan Assets

Issued by: PWBA [U.S. Department of Labor, Pension and Welfare Benefits Administration]

Date: Oct. 19, 2000

The U. S. Department of Laborís Pension and Welfare Benefits Administration (PWBA) today published a final rule to improve the security of more than $300 billion in assets held in private-sector pension plans maintained by small businesses.

"This rule is an important step for enhancing the security of participants and beneficiaries in small pension plans," said Secretary of Labor Alexis M. Herman. "We believe the final rule strikes a reasonable balance between enhanced security and accountability for small plan assets while minimizing the administrative burdens and costs to plans and their sponsors.

"Our appreciation goes to those who gave us input in shaping requirements that will give millions of working Americans greater assurance that their retirement money will be there at retirement,Ē Herman said.

In recent years, considerable public attention has focused on the potential vulnerability of small plans to fraud and abuse. Although such circumstances are rare, the department decided it was appropriate to strengthen the security of pension assets and the accountability of persons handling those assets.

Currently, pension plans with fewer than 100 participants are exempt from the requirement to have an independent qualified public accountant conduct an annual audit of the planís financial statements. On Dec. 1, 1999, the department published a notice of proposed rulemaking containing additional criteria for small pension plans to be exempt from the annual independent audit requirement under the Employee Retirement Income Security Act (ERISA).

The final regulation, which is largely unchanged from the proposal, is designed to safeguard small pension plan assets by adding new conditions to the audit waiver requirement which focus on persons who hold plan assets, enhanced disclosure to participants and beneficiaries, and improved bonding requirements. Clarifying changes were adopted in response to public comments. In addition to clarifying the application of the rule, the department extended the effective date of the rule to give the employee benefit community more time to comply with the new requirements.

The new conditions in the final rule will apply to the first plan year starting after April 17, 2001. The final rule is scheduled to be published in the Oct. 19, 2000 Federal Register.

View More Press Releases by PWBA [U.S. Department of Labor, Pension and Welfare Benefits Administration]

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