Assessing PBGC's Short-Run and Long-Run Conditions

GAO discussed some of the current and anticipated issues involving the Pension Benefit Guaranty Corporation (PBGC), focusing on the: (1) operational and administrative problems at PBGC; (2) financial status of the PBGC single-employer insurance fund and the threat to it from currently underfunded private-sector plans; and (3) risks plan participants still face. GAO noted that: (1) PBGC financial system and internal control weaknesses have made it difficult to determine the reliability of its financial statements, assess the adequacy of its income to support the pension guaranty program, and estimate the additional funds it needs to pay for future terminated plans; (2) the PBGC financial accounting system has not been fully operational since 1988, and efforts to identify and collect delinquent premiums, underpaid premiums, interest, and penalties are inadequate; (3) PBGC has responded to weaknesses by developing a series of interim and long-term financial initiatives and providing additional resources; (4) PBGC has taken steps to collect overdue premiums, interest, and penalties to address its premium collections problems; (5) PBGC has not collected sufficient premium income to offset the unfunded liabilities it has incurred from terminated plans; (6) PBGC future financial condition will be heavily influenced by ongoing underfunded plans; (7) the Employee Retirement Income Security Act did not authorize PBGC to insure all of the benefits provided by defined-benefit plans; and (8) PBGC does not guarantee nonbasic benefits, such as lump-sum death benefits and special supplemental benefits that exceed the amount that would be paid at retirement.