NEW: Government Watchdog Report Highlights Importance of Monitoring and Improving Americans’ 403(b) Retirement Plans
New findings released as House GOP attempts to slash funding for agency charged with overseeing 403(b) plans relied on by millions of teachers and other Americans
WASHINGTON – Today, Ranking Member Robert C. “Bobby” Scott (VA-03) released a new report from the Government Accountability Office (GAO), which underscores the importance of monitoring 403(b) retirement plans in which millions of teachers and non-profit employees invest. The report also highlights several innovative ideas and state-based efforts to improve 403(b) plans.
The new GAO report comes as House Republicans advance a budget that proposes a $38 million funding cut for the Employee Benefits Security Administration (EBSA), which is responsible for the oversight of 403(b) plans and other critical employee benefits, within the Department of Labor (DOL).
In its new report, the GAO noted that, from fiscal years 2010 through 2021, DOL identified violations—including breach of fiduciary duties and irresponsible administration—in roughly 70 percent of its 454 enforcement investigations into 403(b) plans, leading to more than $35 million recovered. However, DOL is currently able to provide oversight on only the smallest fraction of 403(b) plans. Specifically, according to GAO, DOL examined less than 1 percent of ERISA 403(b) plans in 2019. Instead of increasing EBSA’s budget to ensure it can expand its ability to oversee 403(b) plans, House Republicans are doing the opposite.
“Teachers, school personnel, non-profit employees, and other workers rely on 403(b) plans for a secure retirement. Today’s GAO report underscores the need for the Department of Labor to effectively monitor the 403(b) plans within their purview and highlights innovative ideas and state efforts to improve 403(b) plans. Unfortunately, House Republicans are advancing a bill that slashes the budget of the Labor Department’s Employee Benefits Security Administration, which is responsible for conducting critical oversight of 403(b) plans. We must reject these cuts, carefully consider ideas to improve 403(b) plans, and work together to protect Americans’ hard-earned retirement savings,” said Ranking Member Scott.
While many 403(b) plans are covered by the consumer protections under the Employee Retirement Income Security Act of 1974 (ERISA), nearly half of all 403(b) plan assets are in plans not covered by ERISA.
GAO heard from stakeholders and documented ideas on strengthening oversight of non-ERISA 403(b) plans and improving participant outcomes. Multiple stakeholders told GAO that applying additional participant protections—such as fiduciary duties or best interest standards to non-ERISA 403(b) plans—would help ensure that plan sponsors or service providers act in the best interest of plan participants. Additionally, GAO looked at what several states are doing to improve non-ERISA 403(b) plans, including publicly available registries of fees for investment options.
Noting that the DOL website lacks the same level of detailed information on 403(b) plans as exists for 401(k) plans, GAO specifically recommended that DOL update the educational materials on its website to ensure 403(b) participants can access the information they need about their plan.
Read the full GAO report here.
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