PBGC Proposes Changes in the Recovery of Pension Overpayments
FOR IMMEDIATE RELEASE
December 16, 1997
The Pension Benefit Guaranty Corporation (PBGC) has proposed a change in its recoupment regulation that would stop reductions in monthly benefits once the overpayment has been repaid.
"We are making these changes to make sure that no participants pay more than they owe," said PBGC Executive Director David M. Strauss.
To avoid any interruption in benefit payments to retirees and beneficiaries of plans it takes over, PBGC initially makes benefit payments on an estimated basis until the agency determines the benefit amounts due under the federal pension insurance program. Because these are estimated benefits, overpayments may result.
To avoid financial hardship, PBGC recovers overpayments by reducing future monthly payments, usually by no more than 10 percent of the monthly benefit. Under current rules, the monthly reduction is permanent, making it possible that the reduction could continue even after the overpayment is repaid.
PBGC proposes to revise its regulation so that the monthly benefit reduction would be stopped once the overpayment has been recouped. Other changes would give PBGC administrative flexibility to waive recoupment in cases where very small amounts are involved and would allow PBGC to accept repayment ahead of schedule. The proposed amendment would also refine the way PBGC calculates the recoupment in situations where participants have received both overpayments and underpayments.
The proposed changes are published in the December 18, 1997, Federal Register. Comments on the proposal must be received by January 20, 1998, and may be sent by Internet e-mail to firstname.lastname@example.org.
PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers some 42 million American workers and retirees participating in about 50,000 private-sector defined benefit 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 by investment returns.
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PBGC No. 98-08