PBGC report highlights importance of pension counseling

PBGC report highlights importance of pension counseling

We at the Pension Rights Center have long recognized the important role that U.S. Administration on Aging’s Pension Counseling and Information Program (PCIP) plays in protecting the legal rights of retirees and their families. So we were gratified to see that sentiment echoed by Constance Donovan, the Pension Benefit Guaranty Corporation’s Participant and Plan Sponsor Advocate, in her inaugural report. 

In her report, Donovan cites cases handled by the AoA Pension Counseling and Information Program in support of her recommendations for improving the agency’s customer service.   

One case, which the New England Pension Assistance Project (NEPAP) had worked on for four years – and which Donovan helped to finally resolve – demonstrated the importance of saving thousands of “summary plan descriptions” from destruction. Donovan says that saving the plan documents “was an urgent priority raised with me immediately upon my taking this position by the Pension Rights Center, AARP, and the New England Pension Assistance Project.”  Thanks to the PBGC (and Donovan in particular), the National Archives, and the Employee Benefit Security Administration, the documents were saved –  and NEPAP’s client received her pension.

Donovan cites another NEPAP case – in which the PBGC asked a widow to produce her late husband’s 1991 tax returns to prove her right to a survivor’s benefit – to illustrate the need for improved procedures at the PBGC for handling pension claims that fall outside of PBGC’s routine procedures.  Donovan writes:

Each of these cases was resolved with PBGC providing the missing benefit…Each was also resolved with the help of an experienced advocate made available through the AoA’s pension counseling projects. It’s hard to imagine that individuals working through this process on their own could produce submissions like those the counseling advocates are able to develop and work their way for months or years through the process that the advocates are encountering.

In her report, Donovan also credits the Center and other advocates for alerting her to cases and policy concerns that were the basis of recommendations in her report.

For example, the Center requested that she work with the IRS’ Taxpayer Advocate on issues such as “church plans,” which involve both agencies. Citing the Hospital Center at Orange church plan case, Donovan says:

[B]oth the IRS and PBGC worked to address a plan sponsored by a hospital in New Jersey to restore it to its coverage under ERISA. The PRC…believes strongly that pension plan participants need an “advocate” at the IRS as they now have at the PBGC so that there is a dedicated point of entry for participant concerns even when the participants are not the “taxpayer.” This is something I will raise with the National Taxpayer Advocate and with others she suggests be involved.

The report also addresses concerns that we and other advocates have raised about pension dumping or, “de-risking.” Several companies have transferred their pension plan obligations to insurance companies or offered certain groups of retirees lump-sum payments – practices that increase the burden placed on retirees. Donovan states:

Participant groups have in some cases called for a moratorium on such transactions until regulatory guidance can be issued addressing [the] risks they see to the participants… Given the trend sponsors foresee, and the urgency participant groups continue to convey, I want to highlight the importance of these issues at the highest levels.

With this report, Donovan shows the vital role that the counseling projects, other participant advocates, and the Participant and Plan Sponsor Advocate can play by working together both to address the problems of individuals and to identify policy issues that may require new legislation or regulations. Thanks to the Advocate’s very productive first year, we are closer to our goal of ensuring that all retirees get the pension benefits that they have earned.