Pension Overpayment for Dead Teamsters Will Be Repaid, PBGC Vows

The federal government’s private-sector pension insurer will attempt to recover all of the money it might have overpaid 67 union-brokered plans by counting dead participants, including an additional $127 million in bailout cash for Teamsters.

The Pension Benefit Guaranty Corporation is implementing a repayment mechanism and has tapped the US Justice Department Civil Plans Division to recover the Teamsters plan overpayment, Director Gordon Hartogensis told a House subcommittee on Wednesday.

“We are committed to recovering the $127 million as well as any other money that was paid to any other plan for the same reason,” Hartogensis said during the hearing at the Health, Education, Labor and Pensions panel.

Extra cash paid by the independent agency to the Teamsters’ Central States Pension Plan has been at the center of a swirling controversy, with congressional Republicans crying foul over the Biden administration’s multiemployer pension system bailout. PBGC officials had initially bristled at calls to claw back the money, but their latest commitment to Congress suggests the agency is changing its tune.

PBGC’s internal watchdog discovered last year that officials had counted more than 3,500 dead pensioners toward the $35 billion Central States received under the American Rescue Plan Act Special Financial Assistance program. In total, the federal government is expected to write an $80 billion-plus blank check to rescue the most severely underfunded multiemployer plans.

Hartogensis said 67 plans were vulnerable to the deficiencies that allowed dead participants to be counted. It’s still unclear how much additional money was overpaid, and the PBGC’s Office of Inspector General is conducting a more thorough investigation.

The agency has since begun cross-checking the Social Security Administration’s Death Master File against the total number of participants listed in plans’ bailout applications, per OIG’s recommendation. Officials are also checking back on the 67 plans that have already received funds and comparing participants’ list with the DMF file, Hartogensis said.

President Joe Biden signed into law the American Rescue Plan Act in March 2021 without the support of any congressional Republicans. Since PBGC began implementing the program, GOP members have been looking for opportunities to poke holes in what they have characterized as a union worker bailout.

Hartogensis, a Trump appointee, aligned himself on Wednesday with Democrats on the House Subcommittee for Health, Employment, Labor, and Pensions in defending the role the program played in ensuring that the PBGC itself wasn’t undermined by pension defaults and that retirees were paid the benefits they were promised.

“The risk of widespread plan insolvencies and steep increases in pension costs threatened the viability of many of the tens of thousands of companies that participate in multiemployer plans, most of which are small businesses,” he said. “And the economic shocks resulting from the pandemic made the crisis even more acute. Implementation of SFA is PBGC’s highest priority.”

Not a ‘Socialist’

Hartogensis came under heavy fire from Republicans in the panel for his management of the agency. That despite his background—he started his career in Wall Street and was confirmed with the support of the whole GOP Senate conference in 2019.

“Mr. Hartogensis, your time at PBGC has been marked by waste, fraud, and neglect,” HELP Subcommittee Chairman Bob Good (Va.) said in his opening remarks. “Retirement security is quickly eroding thanks to bureaucrats like you. We must uphold the retirement promises made to 31 million American workers with pension plans, without sacrificing the promises to the other 310 million Americans.”

Good said PBGC’s alleged mishandling of the SFA cash made it a “poster child for bureaucratic incompetence and gross mismanagement of taxpayer dollars.” He referred to a December report by the PBGC Participant and Plan Sponsor Advocate that made the case for establishing a career CEO to oversee the agency’s day-to-day activities and said Congress should insist that happens.

On the other side of the aisle, Democrats defended Hartogensis’ tenure.

“No one would accuse you of being a socialist,” Rep. Mark DeSaulnier (Calif.), ranking member of the HELP subcommittee, told Hartogensis. “I appreciate your problem-solving, your intellect, and your honesty here today. It shows we can get things done when we have divergent party affiliations.”

Democrats also said Republicans were missing the larger picture out of the ARP bailout, which they said was saving thousands of pensioners’ retirement benefits.

“They want to turn this into something it’s not,” Rep. Donald Norcross (N.J.) said about the Republican criticism of the SFA rollout. “I’m just trying to understand where the hell this hearing is going other than the money is going to be paid back, it was identified, and we’re following the rules.”

“Pensioners whose money was saved because of what we did in Congress is incredibly important to point out,” he added.