PBGC Has ‘Turned Around’ Potential Crisis, Says Hartogensis

Pension Benefit Guaranty Corporation (PBGC) Director Gordon Hartogensis defended PBGC actions and said that it is “providing crucial pension relief” in a March 20 appearance before the House Subcommittee on Health, Employment, Labor, and Pensions.

The subcommittee, part of the House Education and the Workforce, held the hearing as part of its effort to examine the policies and priorities of the PBGC.

Much of the discussion concerned how the PBGC has been disbursing funds through the Special Financial Assistance (SFA) program. That program, administered by the PBGC, was created by the American Rescue Plan (ARP) Act of 2021 by adding Section 4262 to ERISA. 

“Implementation of SFA remains PBGC’s highest priority,” Hartogensis said in his opening remarks. “With the ARP, PBGC is providing crucial pension relief,” he said, adding that “SFA has turned around the crisis that faced millions of current and future retirees.” 

PBGC Funding 

PBGC insurance is supposed to be funded through employer premiums, not taxpayer funds, said Subcommittee Chairman Rep. Robert Good (R-VA)—which he noted has not been the policy of the current administration. Rep. Tim Walberg (R-MI) expressed a similar sentiment, remarking that “taxpayers are now asked to foot the bill and prop it up.” 

Ranking Subcommittee member Mark DeSaulnier (D-CA), however, cited multiple problems that the PBGC faced when the Biden administration took office and noted that the PBGC had faced insolvency. Further, he said, not only did employers and employees face difficult situations, so did taxpayers, who would have had to have covered plan failures. 

ARP 

Before the enactment of ARP, said Hartogensis, the PBGC faced a solvency crisis and there was a risk of “widespread insolvencies that threatened retirement security.” DeSaulnier, in his remarks, said that the SFA created by ARP saved the pensions of 775,000 participants and has protected 3,000 businesses. Rep. Lucy McBath said ARP and the SFA program are among the administration’s “greatest achievements.” 

Hartogensis, as well as some members, noted that the assistance the ARP and SFA program provides and the solvency they foster in turn makes it easier for businesses to obtain the loans they may need in order to function. 

Rep. Robert Scott (D-VA) argued that the cost of providing SFA funds was “less than half’ what the cost of doing nothing would have been. Rep. Joe Courtney (D-CT) said that in the absence of ARP, $170 billion would have been lost.

I See Dead People

Some of the discussion centered around funds that went to the Central States Pension Fund and the report that $127 million of them were for dead participants. 

Education and the Workforce Committee Chair Rep. Virginia Foxx (R-NC) said she was “disappointed that it took dogged work to recover taxpayer funds sent to the plan for dead people,” and other members expressed frustration as well. 

Hartogensis told the subcommittee that the PBGC had to get the SFA program “up and running very quickly” and was not able to match plan participant lists with the Social Security master file of deaths before disbursements began. 

The PBGC is working to address the concerns the Office of the Inspector General expressed in its 2023 report, Hartogensis said, and is actively working to remove deceased people from the rolls of those to whom relief is provided. He told Rep. Walberg that the agency has “reached out to all plans given aid before the death match scrub.” He said that the PBGC “is committed to recovering the $127 million” and told Rep. Foxx that “we will get the money back on all of them.” 

Rep. Scott pointed out that some deaths may be so recent that plans are not aware of them. He suggested that the amount sent to deceased people was a very small percentage of the funds distributed; Hartogensis said that those funds comprised 0.35% of the SFA funds disbursed.

The Big Picture

The ARP and SFA program are “not just a social safety net,” said Hartogensis—they also have headed off a heavier toll. “A lot of collateral damage would have happened” if it were not for them, he told subcommittee members.