Millions of taxpayer dollars wrongly went to union pension plans for deceased Americans

Lawmakers say tens of millions of taxpayer dollars were wrongly set aside for union pension plans, and now lawmakers want those funds back.

Education and the Workforce Committee Chairwoman Virginia Foxx, R-N.C., and Health, Employment, Labor, and Pensions Subcommittee Chair Bob Good, R-Va., sent a letter to the Biden administration Wednesday following up to see what action the administration has taken to recover funds wrongly allotted to multiemployer pension plans.

Lawmakers passed the American Rescue Plan in 2021, which created the Special Financial Assistance Program to save PGBC, which was in dire financial straits.

Foxx and Good have been conducting ongoing oversight of the Pension Benefit Guaranty Corporation, which has been under scrutiny ever since the Inspector General reported that millions of dollars was wrongly paid out millions of taxpayer dollars to pensions for thousands of deceased Americans.

From the IG:

“We found 3,479 deceased participants in Central States’ (Plan) SFA application because the Corporation did not ensure deceased participants were removed from the Plan’s application. While the Corporation’s review process required Central States to provide a list of all Plan participants and proof of a search for deceased participants (death audit), the Corporation did not cross-check the information against the Social Security Administration’s (SSA) Full Death Master File (DMF) ─ the source recommended by the U.S. Government Accountability Office for reducing improper payments to deceased people. (The Full DMF is more accurate than any database private pension plans have access to and is used by the Corporation in its other insurance programs to ensure proper payments of pension benefits to plan participants). On December 5, 2022, PBGC approved the application and authorized payment of $35.8 billion to Central States. Based on our identification of deceased participants, Central States calculated the value attributed to deceased participants in the SFA application at approximately $127 million.”

The letter went to Attorney General Merrick Garland and demanded documents to prove the administration is actually following up on this issue.

“On April 8, 2024, DOJ announced it had entered into a civil settlement agreement to receive repayment of these funds from Central States,” the letter said. “One other plan, the Graphic Communications National Pension Fund (NPF), also agreed to repay $8 million of improper SFA it received on behalf of deceased participants. However, PBGC has not reported repayment from more than 60 other plans that received similar improper payments.”

The PGBC was created by the the Employee Retirement Income Security Act of 1974 and insures private pension plans for more than 30 million Americans.

PGBC and the DOJ did not respond to a request for comment in time for publication.

After the initial IG report uncovered the payment problems, the PGBC blamed the errors on bad Census data and has pledged to increase cross-checking with Social Security’s death database.