The report, requested by U.S. Representative George Miller (D-California) (see Miller Demands PBGC Auditor Probe), is titled “PBGC Processing of Terminated United Airlines Pension Plans Was Seriously Deficient.” The agency acknowledged the failings over a year ago and began to redo the work. PBGC has also undertaken a strategic review and committed to make changes to ensure the mistakes are not repeated in the future.
The agency said it does not yet know how many people were affected and by how much, but has a policy of correcting any underpayments regardless of amount. If people have been underpaid, PBGC will correct the error and pay the overdue amount with interest. If there have been overpayments, PBGC said it will adjust future payments gradually, without interest or penalty.
“At PBGC, our job is to provide retirement security,” said Vince Snowbarger, deputy director of operations. “We have acknowledged that we at PBGC did poor work and we are embarrassed by it. We understand that any error, no matter how small and even if it affects only a few people, undermines the confidence and security of all of the people we serve. We are committed to fixing our mistakes and making things right. And we are grateful to Congressman Miller and our IG for helping us to make PBGC better.”
PBGC has begun a number of corrective actions. The agency has contracted with independent CPA firms to redo the earlier plan asset evaluations for various plans, including the United Airlines plans. Then, inside the agency, PBGC implemented a three-tier review process to ensure the results are both accurate and complete. Concerning the new review process, the Inspector General’s report says, “If carefully and professionally implemented, the new procedures are likely to result in PBGC conducting a more effective review of future plan asset valuation reports.”
Separately, PBGC began a strategic review of its’ benefits department to identify changes in processes, organizations or personnel that will prevent such deficiencies in the future (see PBGC Audit Finds Fault with Internal Controls).
PBGC generally agrees with the recommendations in the report, said Snowbarger, who has been heading the strategic review. “We have already implemented some, have begun implementing others, and will develop and implement a corrective action plan for the remainder.”
Another airline, American Airlines, recently filed for bankruptcy, and the PBGC announced that taking on its plan could further hurt the agency's financial position (see PBGC: American Airlines Bankruptcy Could Hurt Financial Position).