Compliance July 2, 2008

Senators ask for PBGC Benefits Probe

July 2, 2008 (PLANSPONSOR.com) - Citing a recent situation in which the nation's private-sector pension insurer demanded repayments from retirees after the agency had miscalculated pension benefits, a group of U.S. senators called for an agency investigation.
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The lawmakers complained about situations when the Pension Benefit Guaranty Corporation (PBGC) demands repayments when retirees’ actual benefits are lower than first estimated. “This often results in financial hardship for retirees living on fixed incomes,” the senators said in a letter to the Government Accountability Office (GAO) asking for the probe.

The senators said they wanted the GAO to focus on:

  • how PBGC estimates initial benefits,
  • why there have been delays in making final benefit determinations,
  • the extent to which retiree benefits change significantly when they become final and the reasons for these changes,
  • the discrepancies between negotiated and guaranteed benefits for those retirees whose benefit plans have come under PBGC administration due to plan termination, and
  • how the PBGC appeals process functions, including the ease of participant access to the process and the length of time that passes awaiting decision.

“Retirees should be able to count on a reliable source of income,” said Senator Sherrod Brown, (D-Ohio). “Individuals living on fixed incomes should not suffer when PBGC’s initial estimates are way off or there are unjustifiable delays in finalizing pension payments.”

Among the lawmakers pushing the PBGC probe was Senator (and likely Democratic presidential nominee) Barack Obama (D-Illinois).

“Americans  deserve to retire with a stable income, health care benefits and retirement security,” said Obama, in a press release. “We must ensure that these retirees are not burdened with unfair and erroneous costs as a result of inaccurate PBGC estimates. I urge the GAO to immediately examine any miscalculations in this process.”

The press release and a copy of the letter is available    HERE

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