EBSA Press Release: Innovative New Labor Department Plan Allows Employers To Pay Back Workers' Pensions Without Penalty [03/06/1996]

For more information call: 202-219-8211
 

In the next step of the Clinton Administration's program to protect pensions, Secretary of Labor Robert B. Reich today announced a Pension Payback program designed to make sure that the money deducted from workers' paychecks is actually deposited to their 401(k) plans.

The program, which begins March 7 and ends Sept. 7, 1996, gives employers a six-month grace period to contribute, with interest, funds they deducted from employees' paychecks but failed to deposit in 401(k) plans within required time periods. If they voluntarily come forward, they can avoid criminal and civil penalties.

"Employers have six months to pay up painlessly," said Reich. "As cops on the beat, our goal is not to collect fines. Our goal is to get workers the money that's owed them as quickly as possible."

"This six-month grace period will, I believe, encourage eligible employers who wittingly or unwittingly have misused their workers' savings to come clean, restore all delinquent contributions and lost earnings, and close the books."

The program will not be available to any of the employers who are now under investigation. Nor can employers take part if the total amount of unpaid participant contributions they owe is bigger than the participant contributions withheld from workers' checks for calendar 1995.

During the last year, the Labor Department has opened over 600 investigations involving possible mishandling of 401(k) contributions. Over $6 million have been recovered for workers so far, and more than 400 cases remain open. Thirty-five criminal cases have been opened, four of which have resulted in guilty pleas.

The Secretary emphasized that the vast majority of 401(k) funds are secure.

"The 401(k) plans are a popular, portable way for Americans to save for their retirement, and the vast majority are safe. The Clinton Administration is committed to making sure they all are," Reich said.

More specific information concerning program eligibility requirements and the notification process for participation may be obtained by calling 202-219-4377 or writing the Pension and Welfare Benefits Administration, U.S. Department of Labor, P.O. Box 77235, Washington, D.C. 20013-7235.