Biden’s American Rescue Plan paid $127M to dead Teamsters’ pension plan: watchdog
Hold your horses, Joe!
President Biden’s American Rescue Plan authorized $35.8 billion for a Teamsters’ pension scheme — but the federal agency overseeing the payments failed to prevent $127 million from going to a fund with dead participants, according to an inspector general’s report.
The Pension Benefit Guaranty Corporation’s Inspector General found the International Brotherhood of Teamsters’ pension received money for 3,479 deceased members, a Nov. 1 memo from the office shows.
The federal agency was required to request a death audit from the plan, known as the Central States Pensions Funds, but never verified the accuracy of its information before the money went out.
Central States is one of the largest multi-employer pension funds in the country and can make use of commercial vendors to perform death audits, but in a Nov. 2 statement in response to the watchdog report, the PBGC cited “limitations” on those vendors’ accuracy.
“PBGC’s final rule requires that SFA applicant plans certify the accuracy of the data, including a requirement to submit documentation of a death audit, identification of the service provider conducting the audit, and a copy of the results of the audit provided to the plan administrator by the service provider,” a spokesperson told The Post.
“Pension plans don’t want to be paying out money to dead people,” PBGC watchdog Nicholas Novak told The Post, but noted the agency could have consulted the Social Security Administration’s master death file to obtain the information.
PBGC claimed funds were never directly paid to Teamsters’ individual pensions — and said it would not try to recover the funds.
“OIG’s June 12, 2023, White Paper, ‘Searching Plan Records for Deceased Participants,’ highlighted limitations on the accuracy of commercial vendors’ death audits. In response, PBGC promptly revised the application review process to require an independent death audit for all pending and prospective SFA applications,” PBGC’s statement read.
“PBGC has worked with the OIG to resolve the OIG’s latest recommendation to further improve that process and the agency will implement this change, effective November 1, 2023.”
But Novak pointed out the pension agency “didn’t use the tools they already had” and instead used “improper payment” as “a term of art” to claim that it had followed proper procedures.
“They’re saying they’re not going to recover this money because it wasn’t an improper payment,” he said, adding that PBGC had pledged to “fix” their death audit process going forward. “But what happens to the $127 million? That’s the $127 million question.”
Novak is also auditing other plans to determine whether pension payments were made to additional deceased persons, according to Bloomberg News, which first reported on the error.
“PBGC made direct Special Financial Assistance (SFA) payments to approved multiemployer plans, in accordance with the statute. PBGC has not made payments to plan participants, nor to deceased participants,” a spokesperson told The Post in a statement.
“Additionally, OIG agreed that Special Financial Assistance (SFA) funds were not improperly paid to plans, were not paid to deceased participants or beneficiaries, and should not be subject to recovery actions in an OIG Closure Memo dated September 27, 2023.”
Biden, who has referred to himself as the most pro-union US president in history, signed off on sending more than $80 billion to multi-employer pension plans to provide financial relief and address a funding shortfall as part of the American Rescue Plan.
Novak further mentioned that there was no clawback function available to PBGC through the 2021 law.
After publication, a White House spokesperson told The Post pension plans that received funding gave a “best estimate” of their financial needs “over a three-decade period,” but that the inspector general’s recommendation of using the master death file “would have led to a better point in time estimate of plan participants.”
That would have reduced the size of the $35 billion award by less than four-tenths of 1%, the spokesperson added.
“Apparently, you can in fact take money to the grave — the only catch is that you need to be covered by the PBGC to do so,” House Education and Workforce Committee Chairwoman Virginia Foxx (R-NC) told The Post in a statement.
“No wonder hardworking taxpayers are feeling an excruciating twinge in their wallets — the PBCG’s cutting of benefits checks to a union plan for 3,500 deceased individuals is the cause. Of course that plan doesn’t have to pay a dead participant and doesn’t plan to pay a dead participant.”
Foxx said her House panel “plan[s] to find out” what will happen to the misallocated funds, calling the inspector general’s report “downright appalling.”
Last month, a report from the taxpayer watchdog OpenTheBooks.com also discovered PBGC had made an “egregious” misuse of funds by paying nearly $15 million for new furniture — roughly $14,400 for each of its 1,000 employees — despite its offices remaining mostly empty.
Seventeen of the 24 federal agencies are currently using as little as 9% and as much as 49% of their building capacities while their employees work remotely four years after the COVID-19 pandemic began, according to a July 2023 Government Accountability Office Report.
