Labor department initiates consultant adviser program

BNA Inc.

The Labor Dept. initiated a new enforcement program focusing on pension consulting services, a DOL official said recently.

The new project, which the department named the "Consultant Adviser Program," will address issues of whether plan service providers, particularly investment advisers, may have potential conflicts of interest that could affect the objectivity of the advice they provide to their pension plan clients, according to the Dir. of enforcement in the department's Employee Benefits Security Administration.

Speaking at the annual meeting of the American Society of Pension Professionals & Actuaries, she said the new program, beginning Oct. 1, will focus on the receipt of improper undisclosed compensation by pension consultants and other investment advisers.

She said they are working within the confines of the Employee Retirement Income Security Act, so the question they'll try to answer is whether the receipt of this kind of compensation violates ERISA because the adviser or consultant used its position with the plan to generate additional fees for itself or any other affiliate. Although this is the primary focus of the project, it would not be surprising to see a related objective would be whether the plan level fiduciaries themselves understand the compensation fee arrangement that they're entering into and whether their lack of understanding caused a loss to the plan, she added.

Employer-Sponsored Health Insurance

Meanwhile, a new study has found the percentage of employees covered by employer-sponsored health insurance fell from '01 to '05, as employers dropped coverage an workers became ineligible for coverage or declined to enroll.

The long-standing link between health insurance coverage and employment continued to break down during the 4 years, as the share of employees with employer-sponsored coverage fell from 81.2% in 2001 to 77.4% in 2005, according to the study released recently by the Kaiser Commission on Medicaid and the Uninsured.

The report said about 1/2 the decline in employer-sponsored coverage was the result of employers dropping coverage, a quarter was linked to losses in eligibility for health benefits as a dependent of another employee, while another quarter was attributed to employees failing to enroll in coverage offered to them.

The largest declines in employer-sponsored health coverage were seen among workers at companies with fewer than 25 employees, while the cohort of 19-to-34-year-olds experienced the greatest drop in coverage from 2001 to 2005, the report said.

"The trends in part-time and temporary contract work and industry/occupational shifts are likely to continue. Moreover, pressure on job-based coverage from rising health insurance premiums and greater employee cost-sharing is likely to increase," the report concluded.