WASHINGTON -- A federal agency that guarantees pensions when employers go bankrupt insists it is fixing a problem that has made people repay sometimes huge amounts of money because of long agency delays in calculating proper benefits.
David Strauss, executive director of the Pension Benefit Guaranty Corp., said problems highlighted by a inspector general's audit have largely been corrected with changes begun in 1993.The agency "has worked aggressively to speed up processing time and now has systems in place to correct past deficiencies," Strauss said.
The audit found that among 278 people who wrote to the Pension Benefit Guaranty Corp. from April 1996 to April 1998 about delays in calculating proper benefits, 39 had combined overpayments of $529,994, including one who owed the government $152,525 for overpayments over a 14-year period.
Other problems include reductions in monthly payments with little explanation and guidelines for dealing with pensioners who don't adequately explain the accounting delays, agency inspector general Wayne Robert Poll said.
Sen. Charles Grassley, R-Iowa, chairman of the Senate Special Committee on Aging, released the audit Monday. He cited the case of a 75-year-old widow who waited eight years for a final determination of how much she would receive, then was told she owed the agency $5,667.
"If anything, pensioners are being hurt," Grassley said. "This is not the way for government to treat people."
The Pension Benefit Guaranty Corp., created in 1974, protects the retirements of 42 million workers against the bankruptcy of their employers. As of Sept. 30, the agency already was the trustee or was becoming the trustee for 2,665 pension plans that lacked the money to meet their obligations.
Last year, the agency paid out $848 million in benefits to 210,000 people. None of these people is failing to get on time at least a part of promised retirement benefits.
Problems occur because the agency pays an estimated benefit until a more detailed investigation is done and an "initial determination letter" of the correct amount is sent out. If there has been an overpayment, the retiree must reimburse the difference.
Using a sample of 96,000 participants from 1974 to 1996, the audit found most initial determinations took five years. Sixteen percent took 11 to 20 years.