Recommendations and Actions
The Employee Retirement Income Security Act of 1974 (ERISA) requires all employee benefit plan administrators to provide Summary Plan Descriptions (SPDs) to participants, beneficiaries, and the Secretary of Labor. The Secretary makes only limited use of these documents, but is required to have SPDs available for public disclosure, particularly to participants and beneficiaries.
The SPDs contain information such as the plan name and its type of administration; the name and address of the administrator; names, titles, and addresses of any trustees; a description of the relevant provisions of any applicable collective bargaining agreement; and the plan's requirements respecting eligibility for participation and benefits. The SPD data are important to plan participants in determining their entitlements.
The Department of Labor's (DOL's) Pension and Welfare Benefits Administration (PWBA) is responsible for administering the ERISA requirements concerning SPDs. PWBA's primary purpose for acquiring SPDs is to have them available for participants and beneficiaries who are unable or hesitant to obtain them from their plan administrators.
PWBA annually receives about 150,000 SPDs. PWBA date-stamps the documents, indexes them through a data-entry system, and boxes and ships them to a warehouse for storage. When PWBA receives a request for an SPD, it retrieves the document, makes the necessary copies, and mails the document to the requester.
PWBA's direct costs for this system are approximately $52,000 annually--$42,000 for contractor services for reports receipt, processing, public disclosure, storage, transportation, and retrieval, and $10,000 for executive direction and management control over the contractors. In addition, assuming that plan administrators spend about an hour in obtaining, assembling, and mailing the SPDs to PWBA, then about 150,000 hours are spent by plan administrators in complying with the submission requirements.
On average, PWBA receives requests for about one percent of the SPDs it obtains and stores. During fiscal year 1992, PWBA received 1,017 requests, resulting in disclosure of 3,910 documents. About 25 percent of these documents were requested by the Bureau of the Census. Through May of fiscal year 1993, a total of 691 requests were received for 1,200 SPDs.(1)
While there is some limited benefit from the federal government receiving and storing these documents, the costs to public and private administrators clearly outweigh the benefits. This requirement should be eliminated.
1. ERISA should be amended to eliminate the requirement for filing all SPDs with DOL.
The costs incurred by PWBA and the plan providers to maintain the current system are unnecessary and outweigh the public benefit because PWBA could satisfy requests by directly contacting plan administrators. Amending Sections 101, 102, 104, 106, and 109 of ERISA will streamline the process.
2. ERISA should be amended to authorize PWBA to notify plan administrators to send SPDs directly to requesters, and to obtain documents from plan administrators and forward them to requesters.
This approach will reduce the level of PWBA involvement in SPD dissemination and streamline the process. At the same time, PWBA's authorization to intercede in appropriate cases will alleviate the concerns of individuals who may be reluctant to ask plan administrators for these documents.
Although SPDs are quite important to participants and beneficiaries and should not be eliminated, PWBA will make a more efficient and economical contribution to the SPD dissemination process by limiting its role to helping participants who are either reluctant to contact plan administrators or unable to obtain the documents directly. PWBA reports that its experience in obtaining documents from plan administrators has been good.
Benefit plan administrators are likely to be receptive to a change in the ERISA requirement because of the reduced workload and burden of providing documents to PWBA. Further, PWBA may experience a small residual workload in informing some requesters that the SPDs can be obtained from plan administrators and in requesting the documents on behalf of others. No change in the number of employees required by PWBA is anticipated.
In addition to saving PWBA almost all of the current $52,000 in yearly contract and administration costs, benefit plan administrators will avoid costs of almost $2.5 million. The latter cost estimate is derived by applying the Bureau of Labor Statistics average employer compensation costs of $16.70 per hour to the estimated 150,000 public burden hours devoted to printing, assembling, and mailing the documents to PWBA's contractor.(2)
Budget Authority (BA) and Outlays (Dollars in Millions) ******************************************************* Fiscal Year 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA -$0.1 -$0.1 -$0.1 -$0.1 -$0.1 -$0.1 -$0.6
Out- lays -$0.1 -$0.1 -$0.1 -$0.1 -$0.1 -$0.1 -$0.6
Change in FTEs 0 0 0 0 0 0 0
1. U.S. Department of Labor, Pension and Welfare Benefits Administration, Summary Plan Descriptions Under ERISA, undated. (Issue paper.)
2. U.S. Department of Labor, Bureau of Labor Statistics, News, USDL: 93-220 (June 18, 1993), p. 1.
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