1). However, complex plans and plans with missing data  have required more time to process—up to 9 years, in some instances (the  full time span we examined). PBGC Makes Most Benefit Determinations in Less than 3 Years

PBGC becomes the trustee of most plans within 10 months of termination  and, once it has assumed trusteeship of a plan, the agency takes slightly  less than 3 years to process most benefit determinations and notify  participants of their final benefit amount. Nevertheless, nearly three-quarters of the benefit  determinations that took 4 or more years to process were for participants  in just 10 of the 1,089 plans terminated and trusteed during fiscal years  2000 through 2008, as shown in figure 6. Although nearly two-thirds of the plans we  examined did not have any participants with qualified domestic relations  orders, several of the ten plans associated with the lengthiest processing  times had numerous participants with such orders. New Initiatives to Shorten the Benefit Determination Process Do Not Address Longest Delays

PBGC officials have taken steps to shorten the benefit determination  process, although these initiatives do not specifically address complex  cases. As summarized in table 2, of the 10 plans with the greatest number of  overpayments, 9 also had large numbers of participants, including many  who were subject to the guarantee limits and who were retired and  receiving estimated benefits. Ultimately, this retiree’s payment was  reduced by almost two-thirds, mostly due to guarantee limits. Although these cases accounted for fewer than 10 percent of those with  overpayments, the amounts they owed accounted for more than 40  percent of total recoupments. It has  reduced the average amount of time to decide an appeal by almost a year  and has cut the average amount of time needed to resolve all appeals- related inquiries in half. PBGC Does Not Readily Provide Key Information that Could Help Avoid Unnecessary Appeals

Although some appellants have successfully used the appeals process to  increase their benefits, PBGC is not readily providing key information that  would be helpful to participants in deciding whether or not to pursue an  appeal. Plan provisions and guarantee limitations are often  complicated, and it may be difficult for the average individual to interpret  PBGC’s benefit calculations, especially for complex plans. Recommendations

To improve PBGC’s benefit determination process, a more strategic  approach is needed to prepare for and manage the calculation of benefit  amounts and communications with participants in cases involving large,  complex plans. We analyzed the individual level data on benefits, by case, to determine  the length of time it takes PBGC to make benefit determinations and the  extent to which overpayments affect retirees’ benefits. Most private sector defined benefit plans  do not require or allow participant contributions. In addition, both Bethlehem Steel and RTI  (but not US Airways) were among the 10 plans most affected by  processing delays and by overpayments.
Why GAO Did This Study

As the insurer of over 29,000 private sector defined benefit plans, the Pension Benefit Guaranty Corporation (PBGC) may be required to assume responsibility for the plans of a growing number of companies filing bankruptcy due to the recession. Concerns about PBGC's benefit determination process, reductions in benefits due to guarantee limits, and workers' retirement security overall led the chairmen and ranking members of the Senate Health, Education, Labor, and Pensions Committee and the Senate Finance Committee, among others, to ask GAO to study: (1) how long it takes PBGC to make benefit determinations; (2) the extent of overpayments on retirees' benefits; (3) how well PBGC communicates with participants; and (4) the timeliness and accessibility of the appeals process. To conduct this study, GAO reviewed PBGC policies and procedures, analyzed automated data and case files, and interviewed PBGC officials and certain associations, participants, and their representatives from among those most affected by the process.

What GAO Found

GAO's review of plans terminated with insufficient funds and trusteed by PBGC during fiscal years 2000 through 2008 revealed that a small number of complex plans--especially those with large numbers of participants affected by limits on guaranteed benefit amounts--accounted for most cases with lengthy delays and overpayments. Processing times. PBGC completed most participants' benefit determinations in less than 3 years, but required more time--up to 9 years--to process determinations for complex plans and plans with missing data. Nearly three-quarters of the lengthiest processing times were associated with individuals in just 10 of the 1,089 plans reviewed. Although PBGC has taken steps to shorten this process, its initiatives do not address the longest delays. Overpayments. Although many participants are affected by sizable benefit reductions, the vast majority are not affected by overpayments. Moreover, nearly two-thirds of overpayments involved participants in just 10 plans. In cases with overpayments, PBGC's policy generally requires participants' benefits to be reduced by no more than 10 percent until the amount owed is repaid, but due to participants' ages, the full amount often is never recouped. Communication. PBGC has made efforts to improve communication, but key correspondence often did not meet the needs of those in complex plans. For example, when the process was lengthy, PBGC did not communicate with some participants for several years. When the benefit calculation was complicated, PBGC did not provide explanations that could be understood without further information or assistance. Appeals. Since restructuring the appeals process in 2003, PBGC has reduced the average amount of time needed to decide an appeal by almost a year. However, the agency does not readily provide key information that would be helpful to participants in deciding whether to pursue an appeal.