The Employee Benefits Security Administration doesn’t agree, but an audit by the Office of Inspector General concluded the agency is not providing enough oversight of ERISA retirement plans that invest in alternative investments.
The OIG conducted its audit because the Internal Revenue Service, General Accountability Office and American Institute of Certified Public Accountants expressed concern over how plan administrators were valuing plan assets — particularly alternative investments. An accurate valuation of plan assets, they said, “plays a critical role in determining plan funding levels and payments to participants and beneficiaries.”
As of 2010, employee benefits plans had about $3 trillion invested in alternative investments. EBSA estimated between $800 billion and $1.1 trillion of that were in hard-to-value assets.
The OIG found that EBSA has made efforts to improve oversight of plans that hold hard-to-value alternative investments, but despite these efforts, more work is necessary to increase protections for participants and beneficiaries of plans investing in these types of investments.
“We found EBSA had not formalized into regulatory guidance a requirement that plan administrators identify and adequately support the fair value of hard-to-value investments nor implemented the 2006, 2008, and 2011 ERISA council recommendations on the same,” the OIG report stated.