The Baltimore Sun reports the PBGC said most of the overpayments were made in 2003, when Bethlehem Steel’s retirement plan was terminated and the federal agency took it over. PBGC made initial estimates of what retirees were owed and paid them accordingly to ensure no gaps in their receipt of payments until it was able to tally more accurate payments.
The PBGC is required by federal law to recoup any overpayments.
After four years of recalculation, the PBGC sent letters to most of Bethlehem’s 97,000 beneficiaries telling them what their monthly pension will be. According to the Sun, in Maryland, about 3,000 will see their checks shrink and 1,100 must reimburse the government for overpayments made over the past four years when their benefits were based on estimates.
Two hundred retirees were underpaid and will see their checks grow, and about 11,000 will see no change in their pensions.
The PBGC explained that the steel giant had more than 40 different retirement plans, and actuaries had to calculate 1,000 equations for each retiree to figure out the correct payment.
The average overpayment was $38 per month, to be paid back over an average of 12 years; the average underpayment was $58 per month, and will be paid to retirees in a lump sum. Beneficiaries have 45 days from the date of their letters to appeal changes to their benefits, and their monthly checks will not change until the appeal is resolved.
PBGC officials said a small group of retirees and their spouses have not yet received letters because their cases are more complicated, involving ex-spouses or supplemental plans, the news report said.
“Obviously you worked very hard for the pensions you were promised,” PBGC deputy director Vince Snowbarger told about 500 retirees during the afternoon presentation at the Best Western Hotel at Baltimore Travel Plaza, according to the Baltimore Sun. “But we do have limits on the pensions we can pay.”
U.S. Senator Barbara Mikulski (D-Maryland) recently sent a letter to Charles E.F. Millard, acting director of the PBGC asking him to make sure that the process of recovering the overpayments from retirees is transparent, and for a fair appeals process (See Senators Calls for Transparency in Recovering Overpayments to Bethlehem Steel Retirees ).