Dole Proposes Tougher Safeguards for Pensions : Retirement: Secretary of labor suggests a bounty for those who disclose law violations. She also wants auditors to report any illegalities they find.

WASHINGTON —  Labor Secretary Elizabeth Hanford Dole, seeking to combat fraud and abuse in the nation’s $1.7-trillion pension industry, Tuesday proposed paying a bounty to people who report violations of federal pension laws.

Under Dole’s proposal, anyone supplying information on violations to the Labor Department would be awarded up to 10% of the penalty collected by the government. Similar rewards for reporting wrongdoing are offered by the Internal Revenue Service and the Securities and Exchange Commission.

The proposal was part of a package of steps outlined by Dole to toughen the enforcement of laws protecting the retirement benefits of 76 million workers and retirees in nearly 900,000 pension plans.

Dole said that the department will also ask Congress to double the civil fine for violations and require accountants to report illegal activity uncovered during routine pension audits. Earlier this year, the department said that 100 investigators will be added to monitor pension funds.

Many of Dole’s enforcement proposals were suggested last year by the department’s inspector general, who said that fraud losses have risen sharply at pensions funds in recent years as the department’s enforcement program has weakened.

He touched off a controversy by comparing potential fraud in pension funds with the problems of the savings and loan industry.

“You can’t even begin to make that kind of comparison, and the (pension) system is healthy,” Dole said at a breakfast session with Times reporters. “But we’re going to do what we can to be ahead of the curve in terms of trying to provide more enforcement personnel and making sure that we do (halt) this fraud and deception to the extent that we can.”

Dole said also that a crackdown will continue on businesses where young teen-agers are working illegally. Last week, Labor Department investigators staged a three-day nationwide sweep that found 7,000 violations of child labor laws. Most involved 14- and 15-year-olds who cannot work during school hours, from 7 p.m. to 7 a.m. or more than 18 hours a week.

“It seemed that was the best way you could get people’s attention and educate them as to what the laws are,” Dole said, adding that such sweeps will be repeated and that the department is examining ways to increase the fines for violations.

Dole said abuses have grown in recent years as employers have been forced to rely more on young workers because the adult work force is declining. “They can’t get enough workers,” she said.

Dole’s proposals for tougher enforcement of pension laws were delivered Tuesday to Rep. Tom Lantos (D-San Mateo), chairman of a House subcommittee that heard testimony last year on problems in the industry. Most of the proposals, including instituting the bounty, require congressional approval.

“I am delighted that Secretary Dole is willing to make the commitment of personnel and tougher enforcement of the law to begin solving these critical problems,” Lantos said. “Pensions are not dessert for retired Americans. Pensions mean three good meals a day.”

Dole said that the bounty program was designed to encourage participants and beneficiaries of pension plans to bring evidence of abuses to the Department of Labor.

At the same time, the department proposed changes that would make it easier for people to bring lawsuits against pension plans, including requiring courts to reimburse successful plaintiffs for fees to lawyers and expert witnesses.

The inspector general’s office has proposed requiring outside auditors who examine pension plans to report illegal activities they uncover. The proposal has been opposed by employers and accountants. Currently, auditors are required to disclose illegal activity only if they determine it has a significant impact on the plan’s financial health.