A government corporation responsible for protecting the pensions of millions of Americans was cited for audit failure and misleading Congress, according to the Center for Public Integrity. The Pension Benefit Guaranty Corporation (PBGC) is responsible for protecting the pensions of 44 million retirees and workers in the U.S. if their employers get in to financial trouble.
"PBGC did not have effective internal control over financial reporting (including safeguarding assests) and compliance with laws and regulations and its operations," wrote Inspector General Rebecca Anne Batts.
PBGC has a history of being scrutinized for lax security, letting contractors hire unqualified employees, and failing to maintain a unified financial management system.
In addition, the recession has had a huge impact on PBGC's deficit. In November 2009, PBGC announced that its deficit increased from $11.2 billion in 2008 to $21.9 billion is 2009. In addition, PBGC estimated that the potential cost of covering future pension losses more than tripled from $47 billion in 2008 to $168 billion at the end of 2009.
Unlike many federal corporations, PBGC is not currently financed by tax dollars but by insurance premiums and assets it collects from organizations whose pension plans they rescue.
PBGC's acting director Vincent Snowbarger announced that PBCG is financially stable for the immediate future due to the cash and assets collected from failed organizations. However, if those funds run out, other funding options may have to be considered including raising insurance premium costs for organizations or using tax dollars.
The Center for Public Integrity