PBGC Responds to Issues Raised by Inspector General
FOR IMMEDIATE RELEASE
November 30, 2011
WASHINGTON—The Inspector General for the Pension Benefit Guaranty Corporation completed a report today that described multiple shortcomings in the way the agency valued assets in plans it assumed from United Airlines during 2007 and 2008.
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 report, “PBGC Processing of Terminated United Airlines Pension Plans Was Seriously Deficient,” was requested by Congressman George Miller of the House Education and Labor Committee, out of concern for United’s employees and retirees.
“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.”
The agency 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 will adjust future payments gradually, without interest or penalty.
PBGC has begun a number of corrective actions. First, we 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 IG’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 our benefits department to identify changes in processes, organizations, or personnel that will prevent such deficiencies in the future. The PBGC Inspector General is pleased that PBGC is committed to making the fundamental changes necessary to ensure the proper plans and processes are implemented so similar errors don’t happen again.
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.”
PBGC protects the pension benefits of 44 million Americans in 27,500 private-sector pension plans. The agency is directly responsible for paying the benefits of more than 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums and with assets and recoveries from failed plans.
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PBGC No. 12-09