Remember the American Rescue Plan Act, the $1.9 trillion spending bill passed by Democrats supposedly for Covid relief? It included $86 billion to bail out multiemployer pension funds that union members draw from. The bailouts are being distributed on a case-by-case basis by the Pension Benefit Guaranty Corporation (PBGC), a government agency that oversees multiemployer pension plans.
The bailouts come with no requirements to reform the plans to make them solvent. Apparently they also come with no requirements that recipients have to be alive.
Chairwoman Virginia Foxx (R., N.C.) of the House Education and Workforce Committee, which oversees labor issues, is subpoenaing the director of the PBGC over allegations that the agency made $127 million in payments to at least 3,479 deceased participants in the Central States Pension Fund.
The improper payments were uncovered by the Department of Labor inspector general, who wrote a report in November that said the payments were made because the PBGC did not use the Death Master File (DMF) from the Social Security Administration to check whether recipients had died. The inspector general said it and the Government Accountability Office have both recommended for years that the DMF be used to prevent improper payments to dead people.
“When asked why the Corporation did not check the plan’s census data against the Full DMF, PBGC officials said the Final Rule and [Negotiations and Restructuring Actuarial Department] procedures did not require it,” the inspector general’s report says. “This was true, but the Corporation wrote the Final Rule, designed its SFA procedures, and knew it had access to better data on deceased participants than plans did.”
The inspector general also believes this problem is not a one-off. “Without updated procedures the agency will likely continue to approve applications which include deceased participants that could be identified with available information,” the report says.
The $127 million in payments to dead people were part of the $35.6 billion the PBGC gave to Central States in 2022. The fund’s 350,000 members are mostly retired Teamsters members.
Foxx first inquired about the improper payments in a January 16 letter to the PBGC director. She noted that even Teamsters president Sean O’Brien said improper payments should be returned. Foxx has been going back and forth with the PGBC since then, sending another letter on February 26 and holding a hearing on March 20.
For both of the two prior letters, Foxx extended the deadline for the PBGC to respond. Yet, according to the cover letter on the subpoena, “the Committee is still not in receipt of responsive materials regarding what led to the overpayments or regarding PBGC’s delays in remedying the overpayments.” Foxx wrote that the responses the committee did receive “show a complete and total lack of respect for hardworking taxpayers’ dollars.”
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