WASHINGTON – Today, Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) and Senate Health, Education, Labor and Pensions Committee Ranking Member Bill Cassidy, M.D. (R-LA) introduced legislation requiring that the Pensions Benefit Guaranty Corporation (PBGC) recover, on behalf of American taxpayers, overpayments to pension funds as part of the Democrats’ pension bailout included in the American Rescue Plan Act (ARPA).
In November, the Pension Benefit Guaranty Corporation’s (PBGC) Office of Inspector General (OIG) published a report disclosing that the PBGC overpaid the Central States fund by $127 million after the plan included at least 3,479 dead participants in its bailout request. According to the PBGC OIG, the PBGC’s review process did not require cross-checking the plan participant list with the Social Security Administration’s (SSA) Full Death Master File (Full DMF), despite this practice being recommended as a standard procedure by the OIG. As far back as 2018, the OIG instructed PBGC that using the Full DMF is not only crucial, but essential, to prevent overpayments of annuities to people who are already dead. Under questioning from Sen. Cassidy, Teamsters President Sean O’Brien, who represents nearly 350,000 Central States, Southeast and Southwest Areas Pension Fund (Central States Pension Fund) retiree participants, stated that the fund should return $127 million in taxpayer dollars that were wrongfully paid to it. However, the PBGC has indicated it does not intend to recoup this money, even though it has the legal authority to claw back wrongfully obtained funds. Further, the Central States Pension Fund has not returned the overpayment of taxpayer funds and is treating them as a fund asset. We still do not know how much the PBGC has overpaid for ghost annuities in total to all multiemployer pension plans.
The legislation would require the PBGC to verify past and future pension bailout applications by cross-checking plan participation lists against the Full DMF, ensuring taxpayer dollars are not paying pension bailouts to multiemployer pension plans for deceased individuals. It would further require the PBGC to recoup from multiemployer plans any ghost pensions the plans received as windfalls from taxpayer dollars.
“The complete and total lack of respect for hardworking taxpayer dollars is on full display with Democrats and the Biden administration,” said Chairwoman Foxx. “Case in point, PBGC’s gross negligence of sending $127 million in taxpayer money for dead teamsters and refusing to recover this money. I am pleased to introduce this legislation with Senator Cassidy, so taxpayers get the accountability and oversight they rightfully deserve.”
“Rather than pursuing substantive reforms to at-risk pension funds, Democrats bailed out Central States and 103 other pension plans with inadequate accountability and oversight,” said Dr. Cassidy. “The $127 million wrongfully paid to Central States needs to be returned to taxpayers immediately. And to his credit, Teamsters President Sean O’Brien said they would.”
According to the White House, before Central States received its ARPA bailout, it was the “largest financially distressed multiemployer pension plan in the nation.” After O’Brien agreed that the overpayment should be returned, Cassidy urged the Central States Pension Fund to return the $127 million overpayment to American taxpayers and requested information as to how the union will prevent this kind of poor mismanagement in the future.
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