Republicans grill PBGC over $127 million multiemployer aid 'overpayment'

Two key House Republicans are seeking answers from the Pension Benefit Guaranty Corp. after a report found weaknesses in the agency's special financial assistance application review process that led to what the lawmakers describe as a "$127 million overpayment."

"Taxpayers rightfully expect agencies like PBGC to take the necessary measures to ensure that their funds are protected and spent wisely," Rep. Virginia Foxx, R-N.C., chair of the House Education and the Workforce Committee, and Rep. Bob Good, R-Va., chair of the Health, Employment, Labor and Pensions Subcommittee, said in a Jan. 16 letter to PBGC Director Gordon Hartogensis. "Instead, PBGC's reckless disregard of prudent steps is a case study of waste and abuse. The committee intends to conduct robust oversight of PBGC's negligence, including possible testimony before the committee."

The matter involves the PBGC's Special Financial Assistance Program designed to help struggling multiemployer pension plans. In December 2022, the PBGC awarded the Teamsters Central States, Southeast & Southwest Areas Pension Fund, Chicago, $36 billion in SFA funds, by far the largest award in the program's history.

A report issued Nov. 1 from the Office of Inspector General for PBGC found that in reviewing Central States' SFA application, the agency only required the fund to provide a list of all plan participants and proof of a search for deceased participants, known as a death audit. But the PBGC did not cross-check the information against the Social Security Administration's full Death Master File, which is the source recommended by the U.S. Government Accountability Office for reducing improper payments to deceased people, according to the report.

The PBGC OIG found 3,479 deceased participants in Central States SFA application, so when the amount of aid the plan would receive was calculated, it was inflated approximately $127 million.

Now, Foxx and Good are seeking written responses from Hartogensis on a series of questions and prompts about the report, which include:

• Provide the steps PBGC has taken or plans to take to quantify similar overpayments already paid to other multiemployer pension plans.
• Did PBGC ask plans that received SFA overpayments if they would return the funds? Why or why not?
• Will PBGC compare census data for all pending applications with the Social Security Administration DMF before paying further SFA? If not, why not?

The lawmakers gave the agency until Jan. 30 to respond.

When asked for comment, a PBGC spokesperson directed Pensions & Investments to a Nov. 2 statement that said following a June white paper from the OIG, the agency promptly revised the application review process to require an independent death audit for all pending and prospective SFA applications.