PENSION BENEFIT GUARANTY CORPORATION

Please note: Overpayment amounts recovered are reported in the year they were recovered, not the year they were identified. Therefore it is possible in some years to have a recovery rate greater than 100%.

Overpayment amount identified through recovery activities	$11.9 M
Overpayment amount recovered through recovery activities	$11.9 M
Recovery activities recovery rate	100.0 %

Why recovery audits are not cost effective in certain programs

Benefit Payments disburses over $5 billion in payments annually to over 800,000 participants each month. Due to the dollar value, payment volume, program complexity, and nature of pension payments, PBGC has implemented electronic data analysis, including death match and other procedures, to identify payments that maybe in error. Potential improper payments are subjected to further analysis based on the amount of the payment, the nature of the potential error, and other risk factors to determine whether amounts are due to PBGC.
PBGC has established procedures to recapture overpayments through recovery payments, installment repayment agreements, offsets against other continuing benefits to recoup amounts owed by the participant, or referrals to the Department of Treasury’s Centralized Receivables Service.
In some cases, recapture of payments may not be sought based on demonstration that a participant is experiencing financial hardship or other reasons. Contractor Payments includes the disbursement of over $300 million annually. Due to the dollar value, payment volume, and the nature of contract payments, PBGC has implemented electronic data analysis, including do not pay matching and other procedures, to identify payments that may be in error. In addition, invoice reviews are periodically performed to help assess the accuracy of amounts billed. Potential improper payments are subjected to further analysis based on the amount of the payment, the nature of the potential error, and other risk factors to determine whether amounts are due to PBGC. PBGC has established procedures under the Federal Acquisition Regulation (FAR) to seek reimbursement from contractors that have been overpaid. Further, under the FAR, previous payments are made are generally subject to adjustment based on over or under payments and any amounts due are normally addressed prior to or at contract closeout.
Payments to Federal Employees includes disbursement of about $150 million annually. PBGC’s payroll and other employee payments are processed by the Department of the Interior’s (DOI) Interior Business Center (IBC). PBGC receives a Statement on Standards for Attestation Engagements(SSAE) No. 18 report that reports on the DOI IBC payment operations. No weaknesses related to payroll and other employee payments were reported in the most recent SSAE No. 18. Included in PBGC’s and DOI’s internal controls are that a series of personnel actions are needed to change salaries or process bonus payments. Also, employees receive a payroll statement every two weeks. While mistakes can occur in any operation, PBGC has not experienced significant levels of improper payroll payments. Also, if a mistake is identified, any overpayments can be netted against or offset future payments to those employees or deducted from the last paycheck processed after termination. A review of the following did not identify significant payment issues: >Improper payment risk assessments, >agency Inspector General reviews, >Government Accountability Office reports, and >results of the agency audit resolution and follow up process.
Given the historic low risk nature of payroll disbursements, including the existence of adequate payment processing controls and reviews, and the ability to readily recover any improper payments by offset against future payments through normal payroll operations, establishing a separate payment recapture program for this payment stream is unnecessary and would not be cost effective.
Multiemployer Plan Financial Assistance includes disbursement of over $160 million per year. MEPD generally processes an average of357 financial assistance payments annually to an average of 95 plans. Multiemployer plans are required to provide proof of plan insolvency, sign promissory agreements, and undergo an initial audit to determine if the plan is eligible to receive ongoing assistance from the PBGC. Additionally, multiemployer plans are required to provide documentation to support estimates of future expenses prior to receiving financial assistance on a yearly, semi annually, quarterly, or monthly basis. The PBGC’s Multiemployer Program Division (MEPD) reviews all financial assistance requests in accordance with established policies and procedures to verify requests are reasonable, complete, accurate, and comply with ERISA. MEPD rejects or reduces the amount of financial assistance requested by plans if the administrative and/or benefit expenses do not agree to supporting documentation or if there was a prior overpayment. Additionally, throughout the year, plans submit documentation to support actual expenses incurred to validate a plan’s previous estimate of plan expenses and adjust the most recent financial assistance request amount if the actual amount of expenses significantly varied from the plan’s initial estimate, and MEPD auditors review this documentation and perform a detailed reconciliation. Multiemployer plans are insolvent and generally have no other sources of financial resources beyond PBGC. In addition, there are just over 100 plans, so this is not a large universe of payees to monitor within the existing structure. A review of the following did not identify significant payment issues: >improper payment risk assessment >agency Inspector General reviews, >Government Accountability Office reports, and >results of the agency audit resolution and follow up process. Given the lower payment dollar value and volume, the nature of the multiemployer plan financial assistance program, payment processing controls, and the ability to adjust future financial assistance amounts by actual expenses incurred, establishing a separate payment recapture program for this payment stream would not be considered cost effective.
Premium Refunds issued ranges roughly $88 to $203 million on an annual basis. All premium refund requests are subject to review prior to disbursement with larger payments subjected to additional approvals. Given that each pension plan has an ongoing account with PBGC as to premium amounts due, any adjustments for under or over payments can be reflected in the PBGC’s Statement of Account for each plan. Plans may contest any attempt to recapture overpayments. A review of the following did not identify significant payment issues: > Improper payment risk assessments, > agency Inspector General reviews, > Government Accountability Office reports, and > results of the agency audit resolution and follow up process.
Based on above and especially since there is not significant dollar value or payment volume associated with this payment stream, establishing a separate payment recapture program for this payment stream is not considered cost effective.