Administration
PBGC Should Exclude Deceased Terminated Vested Participants from SFA Calculations (EVAL-2023-05), issued March 22, 2023
PBGC approved Special Financial Assistance (SFA) applications that may have included deceased participants in the terminated vested populations (TVs), resulting in an overpayment of SFA funds. PBGC did not consider available information, such as results of a death audit performed by the Multiemployer Program Division, in its review of applications. In addition, for plans with changed exclusion assumptions, additional requirements were not sufficient to identify deceased TVs in the applications and reduce the associated SFA amounts. As a result, we estimate approximately $6 million in possible improper payments for four of the five plans reviewed. Although PBGC has recently made progress to reduce the risk of improper payments by requiring a death match report (under the Final Rule), it did not add affirmative requirements that would ensure deceased participants are excluded from SFA applications. As a result, PBGC could continue making overpayments for SFA to multiemployer plans.
We made six recommendations to improve the quality of SFA estimates and approvals related to potential deceased participants in the terminated vested populations. PBGC management agreed with all six recommendations. We concur with PBGC’s proposed corrective actions for 5 of the 6 recommendations. For recommendation 2, we will work with PBGC to reach a management decision on the recommendation through the audit resolution process. We commend PBGC on agreeing with our recommendations and working to protect taxpayer dollars. We do encourage PBGC management to complete the recommendations as soon as possible, given the short lifetime of the application and payment process for the program. Since PBGC is dependent on OMB review and approval, we suggest PBGC leverage OMB expedited review as detailed in OMB memorandum M-21¬24, Promoting Public Trust in the Federal Government and Effective Policy Implementation through Interagency Review and Coordination of the American Rescue Plan Act, dated April 26, 2021.
