The Pension Benefit Guaranty Corporation reported an unrealistic present value of financial assistance payments for multiemployer plans in a fiscal year 2010 annual report, the agency's Office of Inspector General (OIG) said in a report recently posted to the agency's website.
In a management advisory report, dated May 21, OIG concluded that PBGC had issued its fiscal 2010 Annual Exposure Report with numerous errors and inconsistencies in both the multiemployer and single-employer sections.
OIG found that the errors occurred because PBGC's Policy Research and Analysis Department failed to establish a quality control or quality review process to ensure the integrity of reported actuarial estimates. PRAD develops policy for PBGC's insurance programs and conducts related research and modeling, OIG said in the report.
OIG said these errors demonstrated a “serious internal control issue that came to our attention during our review of a complaint received through the OIG's Hotline.” According to OIG, the whistleblower alleged that the present value of financial assistance payments for multiemployer plans in the exposure report was unrealistically low.
OIG later confirmed that the numbers questioned by the complainant were indeed incorrect and also that the exposure report included other unsupported and incorrect calculations.
OIG said PBGC was risking harm to its reputation by providing erroneous information in its Annual Exposure Report. Furthermore, OIG said PBGC should issue a corrected version of the report and ensure that it is sent to all who received the original and incorrect version.
However, OIG said that changes PBGC made last year, which the agency said were made to ensure that such errors do not recur, were “still quite limited in scope and would not likely prevent the recurrence of errors.”
By David B. Brandolph
The full text of the report is at http://oig.pbgc.gov/audit/2012/pdf/PA-12-87.pdf.
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