PBGC Responds to 2003-2004 National Steel Pension Concerns
04/04/2011 - The Pension Benefit Guaranty Corporation moved quickly to resolve problems described in a recent inspector general report on the takeover of National Steel’s pension plans in 2003.
The Pension Benefit Guaranty Corporation moved quickly to resolve problems described in a recent inspector general report on the takeover of National Steel’s pension plans in 2003. The report said corrective action began last year.
“We take our responsibility to the people we serve very seriously,” said PBGC Director Josh Gotbaum, appointed to lead the agency last July by President Obama. “We are embarrassed and saddened that this occurred. We are resolved to set things right, and we will do so.”
Following National Steel’s 2003 bankruptcy, PBGC became responsible for seven pension plans covering 35,000 workers and retirees, and has since paid more than $1.5 billion to National Steel retirees. In Minnesota’s Iron Range, PBGC has paid over $62 million to more than 1000 National Steel Pellet Co. retirees since assuming the plans.
At the time that PBGC took responsibility for paying benefits, the agency also took over the plans’ assets. The agency’s IG found that PBGC and its contractor had done a seriously flawed job in making sure it had collected all the assets and that assets had been properly allocated to each plan. As a result, some National Steel retirees might have received lower benefits than they should have.
PBGC, which is committed to correcting its mistakes, is working now to determine whether any National Steel pensioner actually suffered any reduced benefit as a result of the audit. “If anyone lost even a dime, their benefits will be corrected and they will be paid back with interest—and an apology,” said Gotbaum.
Gotbaum joined PBGC in July 2010. Since then, in response to earlier IG findings, the agency has taken the following steps:
· Hired a public accounting firm to completely redo the National Steel asset audit. Once that’s done, PBGC will calculate whether any retirees have been harmed, and how much they are owed in additional benefits and interest.
· Hired new public accounting firms to perform all future asset audits.
· Strengthened its asset audit process and procedures. A chief auditor is now in charge and separate staff auditors have been assigned to each pension plan case team. The process of handling and reviewing asset audits has also been strengthened.
· Planned a top-to-bottom strategic review of the benefit department’s organization, policies and procedures. The goal of the review, to be led by PBGC’s Deputy Director for Operations, is to put changes in place by the end of the year.
“Plain and simple, PBGC did a bad job,” said Gotbaum. “I agree with all the Inspector General’s findings and will implement all her recommendations to make sure this never happens again.”
