2023 – Participant and Plan Sponsor Issues at a Glance
The Advocate’s tenth Annual Report, issued December 29, 2023, details the Office of the Advocate’s Retirement Security Policy Initiative and identifies and recommends improvements to address longstanding systemic obstacles participants and plan sponsors face when interacting with PBGC. It also provides 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 includes a supplemental paper discussing preliminary findings from the Initiative.
The Annual Report also highlights 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 describes 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 addresses 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 provides numerous recommendations for improvement. In particular, it discusses the role that excise taxes can play in complicating the distress termination process and highlights the importance of interagency coordination with IRS regarding the excise tax.
The Report concludes 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.