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GAO discussed problems facing the Pension Benefit Guaranty Corporation (PBGC), focusing on management reforms, modification of pension funding rules, and changes in the insurance premium structure. GAO noted that: (1) weaknesses in internal controls and financial systems have undermined PBGC ability to administer the pension insurance program; (2) PBGC efforts to identify and collect delinquent and underpaid premiums and related interest and penalties have been inadequate; (3) the PBGC computerized accounting system has not been fully operational since 1988; (4) PBGC has established a comprehensive management control review program to help managers establish and maintain internal controls and financial systems, assess their operating effectiveness, and address weaknesses; (5) the deficit in the PBGC single-employer insurance fund has resulted primarily from plans terminating without sufficient funds to pay guaranteed benefits, and a premium structure that does not provide enough revenue to cover losses; (6) while PBGC currently has a positive cash flow, its long-term prospects are unclear; (7) unfunded plan liabilities for terminated plans exceeded those reported by the plans; (8) more than 25 percent of the current PBGC deficit may be attributable to shutdown benefits from steel industry plans; (9) sponsors experiencing financial difficulties take actions that increase the risk to PBGC; and (10) the premium structure and minimum funding standards limit PBGC ability to control the risks underfunded plans pose.

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