“Seriously Deficient” Handling of UAL Bankruptcy by PBGC and Contractor, Detailed Evaluation Shows
WASHINGTON – An evaluation released today by the Pension Benefit Guaranty Corporation’s Inspector General found that the processing of United Airlines’ terminated pension plans beginning in 2004 was seriously deficient due to systemic failures in auditing the plans, citing a number of errors and omissions committed by PBGC’s outside contractors and PBGC itself. The detailed evaluation was initiated in response to a 2009 request by Rep. George Miller (D-CA).
These errors may have affected pension plan participant’s benefit calculations. The Inspector General warned that ongoing efforts by PBGC to correct these problems have been unsuccessful thus far.
In response to the disturbing results of the Inspector General’s evaluation, Miller called on the Board of Directors of the PBGC to take immediate steps to identify and correct the mistakes made in the valuation of plan assets and benefit calculations of United Airlines pension recipients. Miller also asked the that the PBGC board provide a timeline to let plan beneficiaries know whether and by how much their benefits were impacted by the botched audits.
“I cannot adequately put into words how troubled I am by the findings of the OIG’s report. Proper auditing of a pension plan’s assets and liabilities is an essential function of PBGC,” wrote Miller. “Workers and retirees depend on PBGC to do its job correctly. Over the years, countless workers gave their working lives to their companies and through no fault of their own, were stripped of their retirement plans. PBGC and its Board owe these workers and retirees prompt and professional treatment.”
PBGC’s Inspector General found that the audits prepared by PBGC and the outside contractor – Integrated Management Resources Group – hired to assist the agency with pension plan terminations “failed to meet applicable professional standards, contained a myriad obvious errors and omissions as well as unsupported conclusions” in evaluating retirement plan assets and calculating the benefits owed to plan participants.
In July 2010, Miller called on the Pension Benefit Guaranty Corporation's new leadership to immediately address serious concerns raised by the agency’s Inspector General that the same auditing contractor failed to exercise due diligence and that PBGC failed to properly oversee the contractor working on the pension plan terminations. And, earlier this month, the Inspector General released an audit that identified a number of serious internal control weaknesses within the agency, resulting in “errors in valuation of plan assets” and “errors in benefit calculations” for plans the PBGC administers.
Read the letter that Miller sent to the Board of Directors of the PBGC.
Read the Inspector General evaluation.
Read the letter that Miller sent to the Secretaries Solis, Geithner, and Bryson.
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