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CCH® PENSION AND BENEFITS — 7/22/08

Senators call for investigation into PBGC payment calculations

A bipartisan group of thirteen Senators has called on the Government Accountability Office (GAO) to investigate how the Pension Benefit Guaranty Corporation (PBGC) calculates payments when it takes over pension plans. The Senators cited examples of overpayments by the PBGC, resulting in retirees being asked to pay back thousands of dollars to the agency. “Retirees should be able to count on a reliable source of income,” said Sen. Sherrod Brown (D-OH), the leading senator requesting the investigation. “Individuals living on fixed incomes should not suffer when PBGC’s initial estimates are way off or there are unjustifiable delays in finalizing pension payments.”

The PBGC pays estimated benefits to beneficiaries when the agency assumes responsibility for a plan. But it often takes several years for the PBGC to calculate a final benefit amount, often resulting in overpayments that must be returned to the agency, the lawmakers said. The Senators asked the GAO to investigate why delays occur when the PBGC is calculating a final benefit amount and why benefit payments can change significantly upon a final determination. Among the Republicans who signed the letter July 1, 2008 letter requesting the GAO investigation were Sens. Chuck Grassley of Iowa and Arlen Specter of Pennsylvania. In addition to Brown, Democratic signers included Sens. Hillary Rodham Clinton of New York and Barack Obama of Illinois.