2023 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s tenth Annual Report, issued December 29, 2023, detailed the Office of the Advocate’s Retirement Security Policy Initiative and identified and recommended improvements to address longstanding systemic obstacles participants and plan sponsors face when interacting with PBGC. It also provided updates on the Office of the Advocate’s Pension Plan Tracing Service and other resources for connecting participants with their lost retirement benefits.
While a core element of PBGC’s mission is the preservation of the nation’s defined benefit retirement system, this system has declined over the past several decades as a result of numerous systemic and economic factors. The Office of the Advocate’s Retirement Security Policy Initiative is exploring actions PBGC can take to mitigate this decline and preserve, promote, and protect the defined benefit system in accordance with its mission. The 2023 Annual Report included a supplemental paper discussing preliminary findings from the Initiative.
The Annual Report also highlighted issues participants and plan sponsors have in their dealings with the agency. A significant area of concern discussed in the Report is the administrative review process that participants must navigate to dispute a PBGC benefit determination. The report described how PBGC’s failure to provide important documents and information to participants and their representatives, its lack of consistent and publicly transparent review procedures, and its lack of meaningful oversight over Appeals Board decisions, render the review process unnecessarily cumbersome and lead to incorrect benefit denials. Additionally, the report addressed the need for stronger communication and escalation procedures in response to complex or novel cases.
An ongoing area of concern for plan sponsors that has been addressed in many past Annual Reports, and that is further described in the 2023 Annual Report, is the lengthy and cumbersome nature of the PBGC distress termination process. The Report provided numerous recommendations for improvement. In particular, it discussed the role that excise taxes can play in complicating the distress termination process and highlighted the importance of interagency coordination with IRS regarding the excise tax.
The Report concluded with a call for action from Congress and PBGC’s Board of Directors to address longstanding and pressing obstacles that participants and plan sponsors face during the administrative review and distress termination processes at PBGC.
For more information, including the Advocate’s comments and recommendations, visit the 2023 Advocate Annual Report.
2022 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2022 Annual Report recognized areas where PBGC had improved and identified ongoing opportunities for change. It also provided an update on the Office of the Advocate’s Pension Plan Registry Project and included a special section on retirement security and PBGC’s role in promoting the defined benefit system.
The Advocate’s 2022 Annual Report noted that PBGC’s Office of Benefits Administration (OBA) had made staffing, training, and other process changes to address numerous customer service issues related to the agency’s Customer Contact Center. These changes significantly reduced the number of complaints to the Advocate about basic administrative issues and the Advocate’s report included recommendations for further improvements in this area. The Report also reflected significant improvement over the past several years by OBA regarding its processing of Potentially Omitted Participant claims, but challenges remained when the agency encountered a complex claim requiring coordination between different PBGC departments. The report also commended the ongoing success of PBGC’s data-sharing agreement with the Department of Labor’s Employee Benefits Security Administration, which has enabled both agencies to connect more individuals with their unclaimed pension benefits while protecting individuals’ privacy, but noted that PBGC could be doing more to locate participants in its missing participants program.
The 2022 Annual Report also highlighted longstanding plan sponsor concerns that the Advocate had raised in past reports regarding procedural inefficiencies and outdated internal procedures, such as the agency’s process for reviewing distress termination applications and settling the post-termination liability. The report identified numerous parts of the distress termination process that could be reformed to reduce uncertainty, time, and expense for all parties.
The Report provided an update on the Office of the Advocate’s Pension Plan Registry Project, an ongoing initiative to build a defined benefit pension plan registry using PBGC-housed data. In 2022, the Advocate partnered with the General Service Administration’s Centers of Excellence to develop a technology roadmap and registry system architecture, and continued working with PBGC to test and implement different database options. This initiative helps participants locate information about their defined benefit plans, complementing ongoing efforts to connect individuals with their missing benefits.
The Report concluded with observations and questions about the future of retirement security in America. In particular, it discussed PBGC’s role in a changing retirement landscape as more employers leave the defined benefit pension system to instead sponsor defined contribution plans. The report called on PBGC to foster a proactive dialogue around the preservation of the defined benefit system.
For more information, including the Advocate’s comments and recommendations, visit the 2022 Advocate Annual Report.
2021 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2021 Annual Report discusses the Office of the Advocate’s participant and plan sponsor assistance requests and other activities.
The Report identifies the following longstanding participant and plan sponsor issues:
- Case delays related to coordination challenges among PBGC departments
- Lack of clear case ownership and questions about business versus legal decisions
- Outdated policies, practices, and procedures in need of review
- Lax supervision and managerial oversight
The Report illustrates these issues with participant and plan sponsor case examples and provides the Advocate’s overall observations and recommendations. The Report also includes an update on the Office’s Pension Plan Registry Project and the Office of the Advocate’s partnership with the General Service Administration’s Centers of Excellence to support the next stages of the initiative. The Project is exploring options for creating a Registry database with historical pension plan information to help participants searching for their lost pension plans.
For more information, including the Advocate’s comments and recommendations, visit the 2021 Advocate Annual Report.
2020 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2020 Annual Report describes the Office of the Advocate’s participant and plan sponsor cases and activities, as well as the Office’s latest initiative, the Pension Plan Registry Project (Project).
The Report details the Office of the Advocate’s Pension Plan Registry Project, which seeks to create a tool to help participants search information about the history of a pension plan. The Project, which has the support of participant advocacy and plan sponsor trade groups, will use information available at PBGC to develop the tool and help individuals with their lost pension search. The Advocate’s Report identifies the Project as a high priority initiative for the Office in 2021.
The Report also describes many positive changes made by PBGC to address past Advocate recommendations, including improving oversight of PBGC’s Field Benefit Administration offices and revising overpayment recoupment communications and processes. The Report details the successful resolution of an issue brought to the attention of the Office of the Advocate regarding PBGC’s guidance on the effect of the contribution delay provided in the Coronavirus Aid, Relief, and Economic Security Act on the calculation of PBGC premiums. Other notable positive strides include the continued success of a data-sharing agreement between PBGC and the Department of Labor’s Employee Benefits Security Administration Regional offices to help reunite participants and beneficiaries with unclaimed pension benefits and the consolidation of potentially omitted participant cases into the Office of Benefits Administration.
The Report notes areas where participants and plan sponsors still face challenges in their dealings with PBGC, including longstanding cases which go on for months or even years without resolution. The Advocate’s recommendations include conducting a cost-benefit analysis on all cases and revisiting old processes and procedures to ensure they are efficient and customer-friendly. The Report again emphasizes the need for greater scrutiny and oversight of cases that languish at the agency and frequent managerial oversight to clear such backlog. The Advocate’s Report also identifies challenges faced by participants in financially troubled multiemployer pension plans facing insolvency or other benefit cuts.
For more information, including the Advocate’s comments and recommendations, visit the 2020 Annual Report.
2019 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2019 Annual Report identified a variety of positive improvements made by PBGC in response to past Advocate recommendations to address participant and plan sponsor concerns. Notable plan sponsor-related changes included making PBGC’s Mediation Program permanent, improving Early Warning Program communications, and offering a pre-filing consultation for ERISA section 4010 filings. Participant-related positive strides included the continued success of PBGC’s interagency initiative with the Department of Labor’s Employee Benefits Security Administration Regional offices to help reunite participants and beneficiaries with unclaimed pension benefits as well as PBGC’s consolidation of potentially omitted participants case review into PBGC’s Office of Benefits Administration.
The Report also highlighted areas where participants and plan sponsors still face challenges when dealing with PBGC. Many of these challenges involved a lack of effective coordination among and between PBGC departments which contributes to confusion and delays in resolving plan sponsor and participant disputes with the agency. Other notable recommendations included issuing guidance so PBGC can pay plan sponsors interest on premium overpayments and increasing oversight of the Office of Benefits Administration’s Field Benefit Administration offices.
The Report also introduced the Office of the Advocate’s new initiative to create a Pension Plan Registry which would provide a tracing service so participants and plan sponsors can track what happened to a pension plan.
For more information, including the Advocate’s comments and recommendations, visit the 2019 Annual Report.
2018 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2018 Annual Report marked the five-year anniversary of establishing the position of the Advocate at PBGC. While the Report identified the below issues faced by participants and plan sponsors, it also highlighted positive changes PBGC has made in response to prior recommendations by the Advocate. The 2018 Annual Report also contained legislative suggestions to strengthen the Office of the Advocate’s enabling legislation based on the Office’s past five years of experience assisting participants and plan sponsors resolve disputes with the corporation.
Participant Issues:
- Generic communications are inadequate to address complex issues.
- Failure to gather all information on benefit claims hurts participants seeking their benefit entitlements.
- Case management challenges due to lack of contractor supervision.
- Multiemployer Pension Reform Act of 2014.
Plan Sponsor Issues:
- Lack of engaged oversight to promote settlement of stalled cases.
- Protracted negotiations lead to challenges for small employer and charity plan sponsors.
- Lack of clarity in communications with plan sponsors.
- Need for effective coordination and cohesion among different PBGC departments.
Positive Changes Responsive to Advocate Report Recommendations:
- Consolidate the review of potentially omitted participants claims to the Office of Benefits Administration.
- Expansion of the initiative between PBGC and the Department of Labor’s Employee Benefits Security Administration regional offices to help reunite participants with their benefits.
- Provide accessible informal staff guidance concerning Title IV issues for practitioners.
- Plan Sponsor Pilot Mediation Project.
- Established guiding principles for exceptional customer service.
The Report also included the second part of a pension de-risking study commissioned by the Office of the Advocate at the request of plan sponsors which seeks to identify the key causes of de-risking activity as well as PBGC and Congressional actions that could slow pension de-risking activity.
For more information, including the Advocate’s comments and recommendations, visit the 2018 Annual Report.
2017 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s 2017 Annual Report noted positive changes by PBGC which are responsive to past identified plan sponsor concerns, including PBGC’s pilot mediation program and voluntary distress termination pre-filing consultation. The Advocate also highlighted positive participant initiatives, including the publication of a final rule to update PBGC’s Missing Participants regulation and sustained interactions with participant advocacy groups.
Additionally, the Advocate identified the following issues faced by participants and plan sponsors:
Participant Issues:
- Stove-piped departments which hinder participants seeking benefit entitlements.
- Challenges in obtaining documentation relevant to participants’ benefit claims.
- Complex benefit entitlement and omitted participant cases.
- Multiemployer Pension Reform Act of 2014.
Plan Sponsor Issues:
- Lack of ease in doing business with PBGC.
- Lack of transparency and certainty in PBGC’s actions.
- Lack of timeliness.
- Lack of substantive discussion to facilitate prompt settlement.
- Lack of effective coordination and cohesion among various PBGC departments.
For the first time, the Advocate’s Annual Report includes a pension de-risking study commissioned by the Office of the Advocate at the request of plan sponsors which focuses on PBGC and Congressional actions that may slow pension de-risking activity, and highlights the drivers and causes of pension de-risking.
For more information, including the Advocate’s comments and recommendations, visit the 2017 Annual Report.
2016 - Participant and Plan Sponsor Issues at a Glance
The Advocate identified the following themes in the challenges participants and plan sponsors encounter with PBGC in the 2016 Annual Report.
- Interactions with PBGC are adversarial and defensive, rather than collaborative and businesslike, in working toward a mutually agreeable resolution
- There is a lack of transparency in working with PBGC to understand the corporation’s assumptions, resulting in costly and time-consuming interactions with the agency which can go on for months and even years
- PBGC is unwilling to exercise judgment and discretion with participant claims and sponsor penalties, relying almost exclusively on automatic and mechanical-like approaches
- PBGC demands documentation, costly analysis, and historical records that businesses, governmental entities, or participants rarely, if ever, retain
The Advocate also noted positive improvements including PBGC’s release of its proposed Missing Participants Regulation as well as a collaborative effort between PBGC and the Department of Labor’s Employee Benefits Security Administration Chicago Regional Office to reunite participants with their missing participants. The Advocate also highlighted PBGC’s updates to its premium penalty rule which provide extraordinary relief for premium payers by reducing penalty rates for all plans and waiving most of the penalty for plans that meet a standard for good compliance.
For more information, including the Advocate’s comments and recommendations, visit the 2016 Annual Report
2015 - Plan Sponsor Issues at a Glance
The Advocate identified the following issues in the 2015 Annual Report. For more information, including the Advocate's comments and recommendations on these issues, visit the Report.
- PBGC Must Improve Relations with Plan Sponsor
- Premiums and Premium Penalties Need a Fresh Look
- PBGC's Early Warning Program
- Reportable Events Regulations
2015 - Plan Participant Issues at a Glance
The Advocate identified the following issues in the 2015 Annual Report. For more information, including the Advocate's comments and recommendations on these issues, visit the Report.
- Complex Benefit Entitlement and Omitted Participant Cases
- Multiemployer Pension Reform Act of 2014 (MPRA)
- Consultation with the Participant Advocacy Groups and PBGC
- Interagency Coordination and Participant Benefit Entitlements
2014 - Plan Sponsor Issues at a Glance
The Advocate identified the following issues in the 2014 Annual Report. For more information, including the Advocate's comments and recommendations on these issues, visit the Report.
- Improvement of PBGC's working relationships with sponsors: There is a need for PBGC to shift to a less adversarial and more collegial partnership approach in working with the Plan Sponsor community.
- ERISA section 4062(e): There are unresolved issues related to PBGC enforcement of ERISA section 4062(e).
- Communicating PBGC's numbers: There is a need for a more substantive response from PBGC regarding certain financial information, such as how PBGC calculates its liabilities and how PBGC manages and invests its assets.
- Premium penalties: There is a need for more exploration on the issues surrounding premium penalties.
2014 - Plan Participant Issues at a Glance
The Advocate identified the following issues in the 2014 Annual Report. For more information, including the Advocate's comments and recommendations on these issues, visit the Report.
- Non-routine individual requests to PBGC for assistance: Although PBGC has defined processes for responding to participant calls about trusteed plan benefits, participant requests involving complicated or uncommon issues, including "woodwork" or "omitted" participants, may fall outside PBGC's customer service goals and present special challenges.
- Frequent and continuing consultation with Participant organizations: Plan sponsor-based organizations meet regularly with PBGC senior officials and offer PBGC the opportunity to attend professional events and provide updates that address relevant issues. Although Participant organizations have contacts with PBGC and are able to arrange occasional meetings, there is a lack of a regularized, continued practice of communication among PBGC and the participant organizations.
- Improved communication with Participant and Retiree organizations about PBGC's finances and operations: Participant and Retiree organizations are as engaged as sponsor organizations in discussions about PBGC's current financial strength, outlook for the future, premium needs, and more, and would prefer more information-sharing, more of an understanding of current data and trends, and less rapid movement to summary and conclusion.
- Additional items for exploration: There are outstanding issues raised by participant and retiree organizations such as lump sum distributions from plans trusteed by PBGC, church plans, and guidance addressing issues generated by de-risking transactions.