House Launches Probe of PBGC Pension Bailout

Late last year, as part of the American Rescue Plan, Joe Biden injected nearly $36 billion to help the troubled Central States Pension Plan. Now, a bizarre twist has emerged.

A House of Representatives Committee alleges that $127 million of that relief was paid to deceased participants in the plan, which was handled inappropriately by the Pension Benefit Guaranty Corporation (PBGC). The PBGC disputes that claim, but the Biden administration is facing a congressional probe into the affair. Virginia Foxx (R–N.C.), chair of the House Education and the Workforce Committee, and Bob Good (R–Va.), chair of the Health, Employment, Labor, and Pensions Subcommittee, sent a letter to PBGC director Gordon Hartogensis demanding answers surrounding the agency’s refusal to recover the $127 million in taxpayer money it sent to fund pensions for at least 3,479 deceased participants in the Central States, Southeast, and Southwest Areas Pension Fund (Central States Pension Fund).

In the letter, the Congressional members write: The [Committee] “is investigating reckless mismanagement at the [PBGC] that led to sending a $127 million overpayment to one multiemployer plan. This overpayment raises the concern that more overpayments exist. … Amazingly, in its response to the report, PBGC asserted that this payment ‘should not be subject to recovery actions.’ In the same vein, the Central States Pension Fund claims it neither owes nor intends to pay back these taxpayer dollars. By all appearances, PBGC intended to shift taxpayer dollars to the Central States Pension Fund in an unauthorized windfall and refuses to get this money back.”

Published reports say the federal auditor revealed that the PBGC failed to consult the Social Security Administration’s full Death Master File (DMF) before distributing the dollars to the Teamsters’ Central States Pension Fund, which includes almost 350,000 members and is one of the largest multiemployer plans in the nation.

The panel members have asked for documents and answers to their questions on the matter to be returned by January 30. A spokesperson for the PGBC, which serves as a safety net for private-sector defined-benefit pension plans, previously denied that the agency “improperly” paid any funds to pension plans and said that no deceased participants were immediate beneficiaries.

After an investigation, the PBGC issued a statement on the matter on November 2, 2023: “PBGC appreciates [Office of Inspector General’s] conclusion reached in their closure memo of September 27, 2023, that Special Financial Assistance (SFA) funds were not improperly paid to plans, were not paid to deceased participants or beneficiaries, and should not be subject to recovery actions.”

For now, PBGC won’t initiate recovery actions against Central States or any other plans that received overpayments, as the agency was acting in accordance with the rules it had written and standard operating procedures when the money was allocated, according to a PBGC spokesperson.

From: BenefitsPRO