Improved Processes Needed To Insure Timely Benefit Payments to Participants of Single Employer Pension Plans

HRD-84-58: Published: May 31, 1984. Publicly Released: May 31, 1984.

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In response to a congressional request, GAO reviewed the effectiveness of the Pension Benefit Guaranty Corporation (PBGC) processes for ensuring that participants in private pension plans receive guaranteed benefits when plans terminate.

GAO evaluated the PBGC processing of numerous insufficient pension plans to: (1) determine why eligible participants were not receiving benefit payments; (2) assess the PBGC efforts to adjust benefit payments to guaranteed levels; and (3) assess the effectiveness of these processes for providing timely benefit distributions. In addition, GAO analyzed PBGC efforts to locate participants who were not receiving benefits because they could not be located from plan records. GAO found that the processing of terminated plans can be strengthened to provide for more timely restoration of monthly benefit payments and compensation for missed benefit payments. In addition, GAO reviewed a random sample of sufficient pension plan terminations which showed that asset distributions were not timely. Further, GAO found that PBGC processing of sufficient plans can be strengthened and streamlined. Finally, GAO determined that opportunities are available to locate missing individuals entitled to benefits.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: PBGC established a monthly status report for those out of pay status and updated the PBGC operations manual to reflect this.

    Recommendation: To provide for more timely payment of benefits to participants of terminating insufficient pension plans, the Executive Director of PBGC should establish a tracking system that focuses management attention and actions on restoring suspended participant benefits and procedures for reimbursing participants for missed benefit payments on an estimated basis when PBGC starts making estimated monthly payments.

    Agency Affected: Pension Benefit Guaranty Corporation

  2. Status: Closed - Implemented

    Comments: PBGC submitted proposed legislation in accordance with this recommendation and it was included in S 1730, November 14, 1985. However, the legislation was deleted from H.R. 3128, which was passed on March 20, 1986, and forwarded to the President.

    Recommendation: Because PBGC may be precluded from restoring benefits in plans that may be subject to lengthy court action, the Executive Director of PBGC should assess experience in dealing with these cases and, if warranted, seek legislative authority that would permit PBGC to appoint a receiver to assume control of plans where participants' benefits are jeopardized.

    Agency Affected: Pension Benefit Guaranty Corporation

  3. Status: Closed - Implemented

    Comments: An enrolled actuaries post audit program was developed and a sampling methodology has been set up to periodically test a certain percentage of terminated plans determined to be sufficiently funded.

    Recommendation: To augment new PBGC procedures for collection and review of sufficient pension plan data, the Executive Director of PBGC should provide guidelines for PBGC officials to periodically test enrolled actuary certifications to ensure that they are accurate and comply with PBGC regulatory requirements.

    Agency Affected: Pension Benefit Guaranty Corporation

  4. Status: Closed - Implemented

    Comments: The PBGC recently developed enrolled actuaries post audit program provides for confirming, on a sample basis: (1) that participants are receiving PBGC approved benefit payments; and (2) key data elements with participants.

    Recommendation: The Executive Director of PBGC should require consistent application of procedures for confirming that participants of sampled plans are receiving payment of benefits approved by PBGC and revise confirmation procedures to require that key data, such as age, years of employment, and salary, also be confirmed with participants.

    Agency Affected: Pension Benefit Guaranty Corporation

  5. Status: Closed - Implemented

    Comments: PBGC has been receiving periodic data from the Social Security Administration to update its files.

    Recommendation: The Executive Director of PBGC should: (1) analyze insurance program records to identify individuals in plans trusteed by PBGC from 1974 through 1980 who have become eligible for but are not receiving guaranteed benefits; (2) submit the names of individuals who cannot be located from PBGC records for current address searches to the Internal Revenue Service and to the Social Security Administration upon completion of arrangements to use Social Security Administration data; and (3) provide benefits to individuals located through this process.

    Agency Affected: Pension Benefit Guaranty Corporation


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