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PBGC Advocate’s Report Highlights Issues Important to Retirees

Recently we posted a five-part “Know Your Agencies” blog series covering government agencies that play a role in regulating retirement plans. Our third post focused on the Pension Benefit Guaranty Corporation (PBGC), a federal agency that acts as an insurer for pension plans sponsored by private employers. Since the PBGC pays benefits to retirees whose pension plans run out of money, many individuals find themselves making claims for their promised benefits directly to PBGC. We noted that a great resource for individuals seeking help with these benefit claims is the PBGC Participant and Plan Sponsor Advocate (202-326-4489, advocate@pbgc.gov).

Every year the PBGC Participant and Plan Sponsor Advocate submits an annual report to Congress that details areas where the PBGC has made improvements over the past year and areas where the PBGC could improve further. The Advocate’s report for 2018 is now available. For those of us who represent retirees’ interests, this report is a must-read because the PBGC’s activities have a large impact on many of the people we help. It is also of great interest because the Office of the Advocate has been extremely helpful in assisting the Pension Rights Center and the federally-funded pension counseling projects to obtain benefits from the PBGC for our clients. The report reflects lessons learned from some of these cases.

The 2018 report discusses a number of important issues, but we are especially pleased by how thoroughly the Advocate covered the issue of Potentially Omitted Participants. When an employer decides to terminate a financially healthy pension plan, the employer is required to use the pension plan’s funds to purchase annuities from an insurance company to pay the benefits of the employees and retirees participating in the plan. Sometimes record keeping and administrative errors cause individuals to be left out when the employer buys the annuities. Too often, the omissions are not discovered until years later when the individuals are ready to retire and begin receiving benefit payments.  

These individuals are called Potentially Omitted Participants and have the right to make a claim for benefits from the PBGC. Making omitted participant claims to PBGC, however, has historically been a difficult, complicated process for omitted participants and for the organizations that advocate for them. Thanks to efforts by the Participant and Plan Sponsor Advocate, Constance Donovan, and Senior Associate Advocate, Camille Castro, over the past five years, the PBGC has made significant progress in streamlining the claims process for omitted participants. The 2018 report describes how all omitted participant claims have now been consolidated in a single PBGC office, which will make the claims process less daunting for retirees trying to obtain their benefits.

The report also details two omitted participant cases brought to the Advocate’s attention by the South Central Pension Rights Project. The Advocate was able to help the Project prove that one of its clients, an hourly piecemaker, had a right to benefits. In a second case, a widow died before receiving a decision from the PBGC. The report uses these cases to highlight areas where PBGC’s administration of omitted participant claims can be further improved.

The PBGC Participant and Plan Sponsor Advocate has been an incredibly helpful resource for retirees and retiree advocates claiming benefits from the Pension Benefit Guaranty Corporation. If you are interested in reading the Advocate’s full 2018 report, you can find it here.

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