Miller Demands New Head of PBGC Address Serious Inspector General Findings
WASHINGTON, D.C. – U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, called on the Pension Benefit Guaranty Corporation to immediately address serious concerns raised by the agency’s inspector general that an auditing contractor hired by the agency has failed to exercise due diligence and that PBGC failed to properly oversee the contractor. Miller asked the inspector general to look into the termination of the United Airlines plans in 2009.
“Plan participants often face substantial hardship when employers fail to live up to their promises and terminate their pension plans. It is critical that PBGC exercise due professional care in administering a terminated plan,” Miller said in a letter to Joshua Gotbaum, the new director of the pension agency. “I urge you to work with the OIG to determine the scope and severity of the problem and to properly hold accountable any contractor (including suspension of such contractor) or employee who failed to execute their duties in the manner consistent with the requirements of the law.”
The inspector general concluded that PBGC and a contractor performing the plan asset audits during the termination process did not exercise due professional care in the validation of plan assets, which may distort the plan’s health and how much pensioners receive.
In addition, the PBGC hired Integrated Management Resources Group, the contractor highlighted by the OIG for failing to exercise due diligence, to perform retiree plan audits despite allegations of contracting irregularities contained in a 2000 Government Accountability Office investigation.
PBGC Inspector General Letter to Rep. Miller
Rep. Miller 2009 Request to the Inspector General
Text of the letter to Director Gotbaum appears below.
July 23, 2010
VIA FACISIMILE (202) XXX-XXXX
Mr. Joshua Gotbaum
Director
Pension Benefit Guaranty Corporation
1200 K Street, NW
Washington, DC 20005-4026
Dear Mr. Gotbaum:
As you begin your effort to lead the Pension Benefit Guaranty Corporation (PBGC) in these economically challenging times, I write to urge your swift action to address troubling findings described in a letter I recently received from the Office of the Inspector General (OIG) of the PBGC.
On December 14, 2009, I asked the OIG to review the design and implementation of PBGC’s protocols in relation to the United Airlines’ (UAL) pension plan terminations. As part of the review, the OIG looked at plan asset audits for four UAL plans. As you know, the value of a plan’s assets at termination is crucial to accurately calculating the benefits to which plan participants are entitled.
In the report, the OIG concluded that PBGC and the contractor performing the plan asset audits did not exercise due professional care and that “the issues surrounding the inadequate plan asset audits were so significant that additional, more detailed evaluation is warranted.” Further, in discussions with my staff, the OIG indicated that the contractor PBGC hired to perform the UAL plan asset audits (Integrated Management Resources Group, Inc.) was the sole contractor to perform such audits for a number of years, despite past criticisms of its work.
Plan participants often face substantial hardship when employers fail to live up to their promises and terminate their pension plans. It is critical that PBGC exercise due professional care in administering a terminated plan. I urge you to work with the OIG to determine the scope and severity of the problem and to properly hold accountable any contractor (including suspension of such contractor) or employee who failed to execute their duties in the manner consistent with the requirements of the law.
I respectfully request your prompt attention to this matter and that your staff keep me informed of your progress. Please contact me or the Committee’s Senior Investigator, Ryan Holden, at (202) XXX-XXXX if you have any questions.
Sincerely,
GEORGE MILLER
Chairman
cc: The Honorable John Kline
Senior Republican, Committee on Education and Labor
The Honorable Robert Andrews
Chairman, Subcommittee on Health, Employment, Labor, Pensions
The Honorable Tom Price
Ranking Member, Subcommittee on Health, Employment, Labor, Pensions
The Honorable Hilda Solis
Secretary, U.S. Department of Labor
Enclosure
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