The leader of the Pension Benefit Guaranty Corp. on March 20 defended his agency’s implementation of a massive aid program for multiemployer plans and said it has made changes to ensure more plans aren’t overpaid based on faulty census data.
Under the Special Financial Assistance Program, which was created by the American Rescue Plan Act that Democrats passed in March 2021, the PBGC does not make any payments to individuals living or deceased, just to the plans themselves, PBGC Director Gordon Hartogensis said during a hearing held by the House Education and the Workforce Committee’s Health, Employment, Labor and Pensions Subcommittee.
Hartogensis spent the bulk of his testimony on that point because House Republicans have spent months grilling the PBGC over a high-profile overpayment.
PBGC director talks multiemployer plan aid overpayments with lawmakers
PBGC Director Gordon Hartogensis addresses the audience at the Pensions & Investments World Pension Summit.
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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.
But in November, a report from the Office of Inspector General for the PBGC found that in reviewing Central States' SFA application, the agency required the pension fund to provide only a list of all plan participants and proof of a search for deceased participants, known as a death audit. 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 GAO 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 by about $127 million.
The PBGC subsequently revised the application review process to require an independent death audit for all pending and prospective SFA applications, Hartogensis explained March 20.
“There’s no evidence that any of the applicant plans intentionally misled PBGC,” Hartogensis said, adding that the agency “strongly supports” repayment of any SFA amount that was paid based on inaccurate census data.
The PBGC is now working on implementing a mechanism for plans, like Central States, to repay erroneous aid, he said.
Notably, the Department of Labor on March 14 said that plans that received too much federal aid based on inaccuracies in plan census data must return the excess funds, but the department will not take any enforcement action against a plan for doing so.
To date, the program has doled out more than $53 billion to 71 plans that cover about 775,000 workers, retirees and beneficiaries.
Hartogensis said that 67 plans, including Central States, were awarded SFA before the more robust application screening was put in place and that the PBGC is working with those plans to see if additional overpayments were made and begin the repayment process.
