“Reduced regulation” doesn't mean “no regulation.”(Photo: Mike Scarcella/ALM)

Wait. Wasn't Trump supposed to be the president that reduced regulation?

With all the hubbub about the death of the Fiduciary Rule, many have overlooked thereality of the DOL enforcement numbers. The Trump administrationhas shepherded the most dollars in recoveries from enforcementactions in at least the last eight years. Additionally, in Trump'sfirst year, total recoveries exceeded $1 billion for the first timesince the current EBSA reporting format began in 2014.Last yeardid see the second lowest percentage of civil investigations closedwith results (65.3 percent) and the lowest number of civilinvestigations referred for litigation since 2010; however, thenumber of individuals indicted stands as the third highest (113) inthat same time period.

Christopher Carosa, CTFA, ischief
contributing editor for FiduciaryNews.com,
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information, blunt commentary and practical examples forERISA/401(k) fiduciaries, individual trustees and
professional fiduciaries.

These statistics hardly suggest an administration dead setagainst regulation. They do, on the other hand, remind plansponsors they better pay attention to compliance matters. Theastute plan sponsor might ask, “What do these trends suggestregarding where the DOL might be focusing when it comes toenforcement?”

The numbers—and the commentary offered by EBSA—may indicate acouple of specific areas of enforcement concentration. As alwayswhen it comes to this type of analysis, “past enforcement does notguarantee future enforcement.”

Related: EBSA recovers $1.1 billion in FY2017

The first area of discussion centers on what appears to bedeclining. It's quite evident that enforcement results from theVoluntary Fiduciary Correction Program (VFCP) have fallenconsiderably since they peaked in 2013 at 72.1 million. Last year'stotal (10 million) remains slightly above the previous year's (9million), but the downward trend appears to remain. The DOL statesthe VFCP “is a voluntary enforcement program that allows planofficials to identify and fully correct certain transactions.”

One specific category that appears to be on the upswing is theAbandoned Plan Program, which is up 50 percent from 2014 and nearlydouble the number from 2015. According to the DOL, this program“facilitates the termination of, and distribution of benefits from,individual account pension plans that have been abandoned by theirsponsoring employers.”

Tie this together with the commentary provided by EBSA in its2017 Fact Sheet, which states: “Of the $682.3 million recovered inits investigations, EBSA helped terminated vested participants indefined benefit plans collect benefits of $326.7 million due andowing to them.” Nearly half of the recoveries from enforcementactions benefited former employees.

What does this all mean for plan sponsors? First, don't get yourhopes up that you can skate by when it comes to compliance.“Reduced regulation” doesn't mean “no regulation.” Second, if plansponsors want to pick an area in which to be more diligent, itwould be in matters pertaining to former employees.

Perhaps now is the time to rethink the plan's strategy forcatering to participants no longer affiliated with the firm. It maybe in the best interest of the plan providers to keep them in theplan, but is it in the best interests of the plan sponsor and theformer employee?