One hundred years ago, when the Department of Labor was created, 401(k)s and individual retirement accounts weren’t part of the average worker’s vocabulary. Workplaces were far more dangerous, and workplace benefits a long way off. We’ve fought hard to strengthen workers’ rights since then, and a core part of the department’s mission − along with protecting employees’ welfare and wages − is protecting workplace benefits for those who have earned them.
In the last fiscal year, my agency, the Employee Benefits Security Administration, recovered or protected employee benefits worth more than $1.2 billion for workers and retirees participating in private-sector employee benefit plans covered by Employee Retirement Income Security Act (such as 401(k) plans, other retirement plans or health plans).
Much of our work was behind the scenes, but we’ve been involved in some pretty high-profile cases of late. Take, for example, the financial disaster associated with Bernie Madoff. When you hear about the Madoff Ponzi scheme, you might not think about the Labor Department. But we’ve played an important role in recovering some of the retirement savings lost by a multitude of individuals and ERISA-covered plans as a result of investing with Madoff.
Just last week, we reached a settlement with Austin Capital Management to compensate retirement plans for more than $34 million in losses suffered through investments with Madoff. That’s on top of nearly $230 million from two settlements reached last year that compensated ERISA plans and other investors who were harmed by Madoff. Each settlement is a measure of justice for people who worked hard, played by the rules and saved for their retirement.
Mismanagement or misuse of workers’ retirement savings doesn’t only happen in cases involving obvious fraud. For example, we recently reached a settlement with the Sherwin-Williams Co. that provides $80 million to current and past participants of its employee stock purchase and savings plan. In that particular case, we found that the paint manufacturer had engaged in improper employee stock transactions at the expense of the savings of its workers, for the purpose of taking advantage of certain corporate tax breaks.
And last month, we announced a settlement agreement with another household name: ING Life Insurance and Annuity Co. Our investigation uncovered that the company had failed to disclose the fees it was receiving from certain transactions, and as a result, the company will pay $5.2 million to restore funds to more than 1,000 retirement plans. The settlement we achieved means that workers making sacrifices now in order to save for retirement could benefit from higher account balances.
At EBSA, we never lose sight of the fact that these numbers represent the retirement savings of real people – savings that many retirees need now, and that many workers are relying on for a secure retirement in the future. We may not know every challenge to retirement security or be able to solve every problem workers will face in the next hundred years, but our commitment to helping them keep what they earn won’t change.
Phyllis C. Borzi is the assistant secretary of labor for employee benefits security.