PBGC Expands Premium Audit Program Nationwide
FOR IMMEDIATE RELEASE
June 09, 1997
The Pension Benefit Guaranty Corporation (PBGC) today announced the nationwide expansion of a successful premium audit pilot program to enforce compliance with PBGC insurance premium requirements.
"Premium audits give us another useful tool to help keep the insurance program financially sound and pensions secure for America's workers and retirees," said Acting Executive Director John Seal.
Under the expanded program, PBGC will audit premium payments by single-employer defined benefit plans selected from around the country. In a pilot program, launched in 1995, PBGC focused on plans located in the eastern part of the country. The pilot program showed premium audits to be a cost-effective means of identifying and collecting premium underpayments. The program generated over $4 million in additional income for PBGC, collecting $8 for every $1 spent on the effort.
"Most companies properly pay their premiums but mistakes occasionally are made. The audits help us find these mistakes and collect the amounts due the insurance program," said PBGC Deputy Executive Director and Chief Financial Officer N. Anthony Calhoun.
Under the premium audit program, PBGC reviews premium filings, actuarial assumptions, and other information to determine whether a plan calculated and paid the correct premium for the six most recent plan years. Plans that underpaid their premiums will be billed for the unpaid amounts as well as late payment penalty and interest charges. PBGC recently began a voluntary compliance program under which plans can reduce the applicable penalty charges by identifying and correcting premium underpayments before they are contacted by PBGC.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in private-sector defined benefit pension plans. PBGC insures about 50,000 pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.
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PBGC No. 97-31