Pension Funds May Rival S&L; Fraud, Panel Is Told

Limited audits, poor regulation of private pension funds and what was termed a Labor Department mind-set against enforcement have created an environment for fraud that could dwarf the HUD scandal and rival the S&L; crisis, a House subcommittee was told Wednesday.

Officials in the department’s inspector general’s office recited a litany of “parallels” between the savings and loan crisis--which is expected to cost taxpayers at least $165 billion over the next 30 years--and problems that surfaced in its review of pension fund audits by private accountants.

Raymond Maria, the Labor Department’s acting inspector general, said the level of corruption in running the nation’s 870,000 private pension plans has mushroomed since the 1960s and 1970s when abuses were limited primarily to a few union-administered plans.

Sees New Racketeers

“The vulnerabilities in this asset-rich employee benefit plan arena today are being exploited by a new generation of racketeers--attorneys, bankers, accountants, investment advisers . . . ,” Maria told the employment and housing subcommittee of the House Government Operations Committee.

Among the parallels between the S&L; crisis and the potential for a similar financial fiasco with pension funds cited by Maria and other officials were:

--Their size. Pension funds hold some $1.7 trillion in assets compared with nearly $1 trillion in federally insured deposits held by S&Ls.;

--Less than 300 federal auditors are devoted to examining pension funds--about 1/12th the number of federal S&L; examiners.

--The government ultimately is on the hook for insuring pensioners against the loss of promised benefits, just as S&L; depositors are insured against the loss of their deposits.