Pension Benefit Guaranty Corporation

Many GAO audit reports have spotlighted the effect of management failures in the federal government--waste, inefficiency, and even scandal. Political leaders have been forced to spend too much time reacting to surprises like the Department of Housing and Urban Development debacle rather than doing the work the agencies were created to do. GAO began its high-risk program to identify those high-dollar government programs most vulnerable to fraud, waste, abuse, and mismanagement. This report is part of the program's high-risk series of reports, which examine the federal government's efforts to identify and correct problems in 17 especially vulnerable areas, fall into three main categories: lending and insuring, contracting, and accountability. Many of the root causes of the problems afflicting these government programs are traceable to the absence of fundamental processes and systems. GAO urges that future congressional oversight focus on the agency reports and audited financial statements required by the Chief Financial Officers Act, agency management's progress in correcting material weaknesses in program internal control and accounting systems, and federal agency efforts to develop and implement performance standards. The Comptroller General summarized the high-risk series in testimony before Congress; see: Government Management--Report on 17 High-Risk Areas, by Charles A. Bowsher, Comptroller General of the United States, before the Senate Committee on Governmental Affairs. GAO/T-OCG-93-2, Jan. 8, 1993 (22 pages).

GAO found that: (1) the growing PBGC deficit threatens the insurance program's long-term financial viability; (2) effective enforcement of the Employee Retirement Income Security Act (ERISA) requirements is essential to reducing the risk to the insurance program; (3) ERISA violations and the collection of deliquent and underpaid premiums have added to PBGC financial losses and increased its administrative burden; (4) Labor and the IRS have made progress in improving their enforcement efforts, but problems remain; (5) Labor and IRS efforts have been hindered by scarce resources relative to the size of the plan and disappointing enforcement targeting results; (6) recent failures of several large insurance companies have raised concerns that federal oversight of plans' selections of insurance annuity providers is inadequate; and (7) inadequate federal oversight may add to increasing pressures Congress faces to expand PBGC guarantees to cover insurance annuities if the existing guarantees fail to adequately protect pension benefits.