Keep Focus on Service, Says PBGC Participant and Plan Sponsor Advocate
In the process of enforcing the law, the Pension and Benefit Guaranty Corporation (PBGC) needs to keep in mind that its mission is to preserve and protect defined benefit plans. That is one of the underlying themes in the first annual report of the PBGC participant and plan sponsor advocate
. Constance Donovan, the advocate, issued the report on Dec. 31.
Donovan expressed concern over the observation by plan sponsors and participants and their advocates that the PBGC takes a “growing adversarial and over-reaching approach” and that such an impression can have a negative long-term effect on the retirement security of millions of Americans. She warns that if the PBGC views employers and participants as potential adversaries, it loses sight of the fact that it can only succeed if those it serves do.Plan Participants
The report says that individual requests for assistance deserve greater customer service attention even when non-routine. To accomplish that, the report suggests the following:
- New reporting obligations for terminating plans and new annual reporting obligations for ongoing plans that reduce their participant populations through annuity or lump sum offers may help reduce the number of “woodwork” participants.
- It may be helpful to convene a discussion that includes those who handle these cases within the PBGC for trusteed plans and for standard terminations.
- Perhaps responses could be streamlined and expedited if one unit could be assigned to receive complex cases.
It says that participant organizations would benefit from the kind of frequent and continuing consultation that PBGC and sponsor-based organizations share. The report says that the PBGC and the participants’ representatives would benefit from a regular, sustained series of encounters with PBGC in which mutual priorities are discussed, substantive information is exchanged, and participants’ understanding of PBGC’s next steps and timetables are made more concrete.
The report also says that the participants’ and retirees’ organizations would benefit from improved communication about PBGC’s finances and operations, particularly as the PBGC experiences significant changes in the status of its two insurance programs.
The report says that there is a compelling need to shift to a less adversarial and more collegial partnership approach in working with the plan sponsor community. It also says that the PBGC needs to listen more to the plan community and attempt to reach reasonable middle ground on critical issues.
The report expresses hope that the advocate can contribute to the discussion between the PBGC, the plan sponsor community and other appropriate stakeholders, to help facilitate a deeper sense of acknowledgement and engagement on the fundamental financial challenges facing PBGC and the premium payers that sponsor DB plans.
The report also says that premium penalty procedures present opportunities for improvement, and that the PBGC should give consideration to the payment of interest on premium overpayments. It says that the PBGC should take steps immediately to address the authority it was given in 2006 under the Pension Protection Act to permit payment of interest on overpayments of premiums by sponsors, including the payment of interest on a retroactive basis for sponsors who have already settled their overpayment matter with PBGC.