Central States Pension Plan Agrees to Repay Excess Special Financial Assistance Funds

The Central States, Southeast and Southwest Areas Pension Plan (Central States) has entered into a civil settlement agreement pursuant to which it has agreed to repay more than $126.5 million in excess funds that it received from the Pension Benefit Guaranty Corporation (PBGC) in connection with the PBGC’s Special Financial Assistance Program.

The American Rescue Plan Act of 2021 established the Special Financial Assistance (SFA) Program to protect millions of workers in multiemployer pension plans who faced cuts to their benefits, including potentially catastrophic benefit reductions in many cases. The SFA Program is administered by the PBGC, which was authorized to make one-time payments to certain eligible multiemployer pension plans in the amount that was projected to enable the plans to pay all benefits through 2051. Because inclusion of participants who died in the census data provided with the SFA application could alter the amount of funding that an eligible multiemployer plan would need to pay benefits in future years, the PBGC initially required SFA applicants to provide documentation of an independent death audit to identify deceased participants in support of plans’ SFA applications.

Despite its best efforts, Central States’ census erroneously included approximately 3,500 deceased participants among the more than 360,000 plan participants identified in the plan’s SFA application. The erroneous inclusion of deceased participants in Central States’s application was identified during an audit conducted by the PBGC’s Office of Inspector General (PBGC-OIG). The audit determined that as a result of the errors Central States’ SFA award of approximately $35.8 billion was overstated by approximately $126 million. Central States cooperated with the government’s investigation in this matter, including assisting with the actuarial analyses necessary to calculate and validate the amount of the excess funds that it received. 

“This settlement demonstrates the Civil Division’s commitment to help recover any excess funds paid in connection with the SFA Program,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. “I encourage other pension plans to cooperate with the government’s ongoing efforts to identify and recoup excess SFA Program funds.”

“PBGC-OIG is committed to conducting investigations, audits and other work to strengthen the public trust in government operations,” said Inspector General Nicholas J. Novak of the PBGC-OIG. “Today’s settlement ensures that Central States will return approximately $126.5 million to the United States Treasury, and demonstrates that the partnership between the PBGC-OIG and the Justice Department provides a critical mechanism to protect taxpayer funds.”

“The PBGC has been coordinating with the PBGC-OIG, Justice’s Civil Division and Central States to finalize this agreement,” said PBGC Director Gordon Hartogensis. “We appreciate their collaborative efforts in facilitating this recovery. PBGC is also working with other plans to recover any SFA funds paid out because of inaccurate census data.”

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, PBGC-OIG and PBGC Office of General Counsel, along with the Department of Labor and Department of Treasury.

Senior Trial Counsel Kelley Hauser of the Civil Division’s Commercial Litigation Branch handled the matter.

The claims resolved by the settlement are allegations only. There has been no determination of liability.