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GAO-07-757R 1 (2007-05-18)

handle is hein.gao/gaocrptavho0001 and id is 1 raw text is: uA ntabity * Interity Reliability United States Government Accountability Office Washington, DC 20548 May 18, 2007 The Honorable Max Baucus Chairman The Honorable Charles E. Grassley Ranking Member Committee on Finance United States Senate The Honorable Edward M. Kennedy Chairman The Honorable Michael B. Enzi Ranking Member Committee on Health, Education, Labor and Pensions United States Senate Subject: PBGC's Legal Support: Improvements Needed to Eliminate Confusion and Ensure Provision of Consistent Advice The Pension Benefit Guaranty Corporation (PBGC) insures the pensions of nearly 44 million private sector workers in over 30,000 employer-sponsored defined benefit pension plans.' Established in 1974 as a self-financing government corporation, PBGC's primary responsibility is to insure, under statutory limits, the pension benefits of participants in covered private defined benefit plans. PBGC collects premiums from the sponsors of defined benefit pension plans and administers plans that are terminated for reasons such as plan insolvency or bankruptcy. In the event of a termination, PBGC assumes control of plan assets, determines plan benefit liabilities, and pays benefits as guaranteed by statute. In fiscal year 2006, about 612,000 plan participants and beneficiaries received $4.1 billion in benefit payments from PBGC. An additional 659,000 participants in plans already trusteed by the corporation will receive benefits from PBGC when they become eligible to retire. An increase in underfunded plan terminations in recent years increased the number of plan participants receiving and eligible for benefit payments. Until recently, all of PBGC's attorneys worked in the Office of the General Counsel. The General Counsel reports to the Director' and until recently had responsibility for all legal matters, from representing PBGC in bankruptcy and litigation matters, to providing advice on personnel and 'Defined benefit plans pay specific retirement benefits, generally based on years of service or earnings or both; the sponsoring company is responsible for ensuring that plan assets are sufficient to pay liabilities. 2Until recently, the PBGC was headed by an Executive Director, but the Pension Protection Act of 2006 changed the title to Director and provided for appointment by the President with the advice and consent of the Senate. Pub. L. No. 109-280, § 411(a), 120 Stat. 780, 935 (to be codified at 29 U.S.C. § 1302(a)). Throughout this letter, we use the term Director. GAO-07-757R Reorganization of PBGC's OGC Page 1

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