SEVENTY-SIX million American workers expect that, when they retire, they will collect retirement income from the private pension plans to which they now belong. But will there be enough money in the pension funds? Most will collect the money. But some may not. Nobody knows how many, not even the government, which is supposed to supervise large pension plans.
Fifteen years ago, only 3 percent of workers enrolled in pension plans received pension benefits. Then a federal law, usually called the Employee Retirement Income Security Act of 1974 (ERISA), was passed to remedy the situation. It was supposed to require federal supervision of the majority of private pensions.
But questions exist as to how well the law is working, and Congress is investigating the issue. No one wants to risk a return to the days when few pension promises were kept.
Today 40 million workers - slightly more than half of those belonging to private pension plans - will get their retirement money one way or another. The federal government guarantees their pension plans through its Pension Guaranty Benefit Corporation. If the plans do not have enough money, the government will step in and keep retirement payments coming.
But the government does not guarantee the plans of nearly 36 million other workers. These include the plans of firms with fewer than 26 employees, church organizations, and professional service employees such as physicians and lawyers. If these pension plans lack the resources to meet their obligations, payments to their retirees will be reduced or stopped: The government will not make payments.
Pension experts generally believe that most private pension plans are financially sound and well administered, and will be able to make all the retirement payments promised to current and future retirees.
But some pension plans are questionably administered and on shoddy financial footing. Others are looted by the people who are supposed to administer them, according to investigations by the inspector general of the Department of Labor, and complaints by individual retirees to the Pension Rights Center, a private agency.
No one knows how many plans are involved in these dubious practices. But two years ago the inspector general examined a number of pension funds and discovered 3/10ths of 1 percent of their assets missing. If that proved to be an average loss for all private plans, the total would be ``four billion dollars in misused assets,'' says Rep. Tom Lantos (D) of California. Representative Lantos is chairman of the House Subcommittee on Employment and Housing, which has just begun series of hearings on the issue.
The Lantos subcommittee is in the early stages of trying to figure out how to tighten up the supervision of pension plans, to make sure their administrators obey existing federal law and have enough money to meet their obligations.
Raymond Maria, acting inspector general of the Labor Department, says two fundamental problems exist with the department's oversight system for the large pension plans. One is that the annual audits by independent accountants, required by the ERISA law, too often fail to turn up problems that exist within the administration of pension plans. Mr. Maria recommends that auditors conduct more thorough investigations and be required to report any irregularities both to the Labor Department and to workers covered by the plans.
Maria says that the second problem is that the Labor Department has failed to develop the mentality to be willing to prosecute wrongdoers with criminal charges; he calls this an ``institutional resistance to pursue criminal sanctions.'' Maria asks that Congress pass a law that would require the Labor Department to return to the inspector general's office the freedom to pursue criminal investigations of nonunion pension and welfare plans.
Some authorities would add a third problem: That the Labor Department has too few employees to monitor pension plans. A consequence, the department is able to audit only one percent of these plans a year.
In addition, penalties for violating the basic federal law supposed to protect private pension plans are too weak to deter wrongdoing, Maria says. ``Compliance is achieved only when a credible deterrent exists,'' he says.