On October 17, 2012, the Pension Benefit Guaranty Corporation ("PBGC") announced the
hiring of new directors of benefits payments and quality management. The appointments were made in part due to findings by the PBGC's inspector general that
the agency undervalued the terminated pension plans of United Airlines. According to PBGC's Director, Joshua Gotbaum, “One of the issues that has been raised with our benefits
department is that the agency was sloppy in checking the value of assets at
United and elsewhere, and the agency was. And we've done a whole bunch of things
to go back and redo the work.” PBGC on August 15, 2012 that it would begin making corrected payments
and back payments to retired United Airlines pilots and management employees in
September, following a completed a review of the air carrier's pension assets . PBGC determined after several audits that an agency-hired contractor had undervalued United Airlines' terminated pension
plans by about 0.75 percent, or $58 million, by relying on trustee-furnished
accounts that were out of date or not adjusted to reflect the fact that PBGC was
assuming responsibility for the pensions. While it turned out that the agency only “shortchanged” some United
employees by less than 1 percent of what they were owed, Director Gotbaum said that
mistake needed to be remedied. “This mistake on relying on the trustees' numbers and getting stale
numbers turned out to not have a large effect, but the fact of the matter is
that any mistake, any mistake we do, undermines the confidence of anyone who
gets a benefit from us. So it does not matter that in United we were paying 99.5
percent of the benefits to 8,000 people and 100 percent of the benefits to the
rest. As a result, we have made a series of changes in the organization.” PBGC also appointed a director of the agency's
new Quality Management Department. The department will focus on best practices
for PBGC's benefits department, as well as the entire agency. “One of the points that our inspector general said was, you have a
benefits group and you don't have any organization within PBGC to do quality
management and to do oversight, except the IG, and the IG is not supposed to be
working for the agency,” Director Gotbaum said. “So we took the IG's advice and we set up a separate operation:
quality management. That is entirely new,” he said. PBGC also plans to use the
Quality Management Department to review other “broader processes” of the agency.
PBGC's news release is at http://www.pbgc.gov/news/press/releases/pr12-29.html?cid=CPAD01ACOCT1720121.
