[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                 EXAMINING THE POLICIES AND PRIORITIES
                    OF THE PENSION BENEFIT GUARANTY
                              CORPORATION

=======================================================================

                                HEARING

                               BEFORE THE

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                                 OF THE

                COMMITTEE ON EDUCATION AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             SECOND SESSION
                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 20, 2024
                               __________

                           Serial No. 118-42
                               __________

  Printed for the use of the Committee on Education and the Workforce
  
  
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]  


        Available via: edworkforce.house.gov or www.govinfo.gov
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
56-779 PDF                WASHINGTON : 2024           


                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

JOE WILSON, South Carolina           ROBERT C. ``BOBBY'' SCOTT, 
GLENN THOMPSON, Pennsylvania             Virginia,
TIM WALBERG, Michigan                  Ranking Member
GLENN GROTHMAN, Wisconsin            RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York          JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia               GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana                     Northern Mariana Islands
JAMES COMER, Kentucky                FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania          SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah                  MARK TAKANO, California
BOB GOOD, Virginia                   ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan               MARK DeSAULNIER, California
MARY MILLER, Illinois                DONALD NORCROSS, New Jersey
MICHELLE STEEL, California           PRAMILA JAYAPAL, Washington
RON ESTES, Kansas                    SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana              LUCY McBATH, Georgia
KEVIN KILEY, California              JAHANA HAYES, Connecticut
AARON BEAN, Florida                  ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri              HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas               TERESA LEGER FERNANDEZ, New Mexico
JOHN JAMES, Michigan                 KATHY MANNING, North Carolina
LORI CHAVEZ-DeREMER, Oregon          FRANK J. MRVAN, Indiana
BRANDON WILLIAMS, New York           JAMAAL BOWMAN, New York
ERIN HOUCHIN, Indiana

                       Cyrus Artz, Staff Director
              Veronique Pluviose, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                      BOB GOOD, Virginia, Chairman

JOE WILSON, South Carolina           MARK DeSAULNIER, California
TIM WALBERG, Michigan                  Ranking Member
RICK ALLEN, Georgia                  JOE COURTNEY, Connecticut
JIM BANKS, Indiana                   DONALD NORCROSS, New Jersey
JAMES COMER, Kentucky                SUSAN WILD, Pennsylvania
LLOYD SMUCKER, Pennsylvania          FRANK J. MRVAN, Indiana
MICHELLE STEEL, California           PRAMILA, JAYAPAL, Washington
AARON BEAN, Florida                  LUCY McBATH, Georgia
ERIC BURLISON, Missouri              JAHANA HAYES, Connecticut
LORI CHAVEZ-DeREMER, Oregon          ILHAN OMAR, Minnesota
ERIN HOUCHIN, Indiana                KATHY MANNING, North Carolina

                         C  O  N  T  E  N  T  S

                              ----------                              
                                                                   Page

Hearing held on March 20, 2024...................................     1

                           OPENING STATEMENTS

    Good, Hon. Bob, Chairman, Subcommittee on Health, Employment, 
      Labor, and Pensions........................................     1
        Prepared statement of....................................     4
    DeSaulnier, Hon. Mark, Ranking Member, Subcommittee on 
      Health, Employment, Labor, and Pensions....................     6
        Prepared statement of....................................     8

                               WITNESSES

    Hartogensis, Gordon, Director, Pension Benefit Guaranty 
      Corporation................................................    10
        Prepared statement of....................................    12

                         ADDITIONAL SUBMISSIONS

    McBath, Hon. Lucy, a Representative in Congress from the 
      State of Georgia:
        Letter of support dated March 2, 2021....................    28
        Letter of support dated February 23, 2021................    30

                        QUESTIONS FOR THE RECORD

    Responses to questions submitted for the record by:
        Mr. Gordon Hartogensis...................................    48

 
                 EXAMINING THE POLICIES AND PRIORITIES
                    OF THE PENSION BENEFIT GUARANTY
                              CORPORATION

                              ----------                              


                       Wednesday, March 20, 2024

                  House of Representatives,
    Subcommittee on Health, Employment, Labor, and 
                                          Pensions,
                  Committee on Education and the Workforce,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:15 a.m., in 
room 2175, Rayburn House Office Building, Hon. Bob Good 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Good, Walberg, Banks, Foxx, 
DeSaulnier, Courtney, Norcross, McBath, Hayes, Manning, and 
Scott.
    Staff present: Cyrus Artz, Staff Director; Nick Barley, 
Deputy Communications Director; Isabel Foster, Press Assistant; 
Daniel Fuenzalida, Staff Assistant; Sheila Havenner, Director 
of Information Technology; Alex Knorr, Legislative Assistant; 
Andrew Kuzy, Press Assistant; Georgie Littlefair, Clerk; John 
Martin, Deputy Director of Workforce Policy/Counsel; Hannah 
Matesic, Deputy Staff Director; Audra McGeorge, Communications 
Director; Mike Patterson, Oversight Investigative Counsel; 
Rebecca Powell, Staff Assistant; Heather Wadyka, Professional 
Staff Member; Seth Waugh, Director of Workforce Policy; Joe 
Wheeler, Professional Staff Member; Maura Williams, Director of 
Operations; Jeanne Wilson, Retirement Counsel; Nekea Brown, 
Minority Director of Operations; Ilana Brunner, Minority 
General Counsel; Stephanie Lalle, Minority Communications 
Director; Raiyana Malone, Minority Press Secretary; Kevin 
McDermott, Minority Director of Labor Policy; Britany Alston, 
Minority Operations Assistant; Veronique Pluviose, Minority 
Staff Director; Swetha Ramachandran, Minority Intern; Dhrtvan 
Sherman, Minority Committee Research Assistant; Maile Sit, 
Minority Intern; Clinton Spencer IV, Minority Staff Assistant; 
Adrianna Toma, Minority Intern; Banyon Vassar, Minority IT 
Administrator.
    Chairman Good. The hearing on the Subcommittee on Health, 
Employment, Labor and Pensions will come to order. I note that 
a quorum is present. Without objection, the Chair is authorized 
to call a recess at any time.
    Mr. Hartogensis, as you near the end of your 5-year term as 
the Director of the Pension Benefit Guaranty Corporation, or 
PBGC, the day has come for--finally come for appropriate 
oversight and accountability. The 31 million Americans with 
private pension plans deserve to hear from the top government 
official responsible for safeguarding their retirement.
    The PBGC was created to be the insurance company for 
private pension plans. If the employer is unable to payout the 
benefits by the time a worker retires, that worker should have 
confidence that he or she will still receive their benefits 
because of the PBGC's protection.
    Under the law, the Pension Benefit Guaranty Corporation was 
created to be self-sustaining, meaning that it should operate 
under Congress's oversight, but independent of taxpayer funds. 
The pension insurance in PBGC operations is supposed to be 
funded primarily through employer premiums not covered by the 
U.S. Treasury. However, this all changed under the Biden 
administration.
    The so-called American Rescue Plan Act gave a 91-billion-
dollar bailout to the failing multi-employer pension fund. The 
need for the bailout underscores the ongoing mismanagement of 
funds at the PBGC. Mr. Hartogensis, your time at PBGC has been 
marked by waste, fraud, and neglect. In disbursing funds made 
available to you by the American Rescue Plan, PBGC sent almost 
127 million dollars to fund pensions for nearly 3,500 dead 
people.
    This happened under your watch, despite the Office of 
Inspector General's warning to cross check these payments with 
the Social Security Administration's death master file. Then 
you refused to claw back or collect those funds. In January and 
February, Chairwoman Foxx and I sent you letters detailing the 
Committee's concerns and seeking answers from PBGC.
    Unfortunately, the responses that were received from your 
agency were inadequate and failed to provide clear answers. I 
hope you will take the opportunity today to be more forthcoming 
and come clean about PBGC's implementation of the American 
Rescue Plan and its inexcusable payments to multi-employer 
pension plans for dead people.
    I think we can all agree this should come as no surprise 
that dead people do not need pension checks. Additionally, the 
PBGC has also looted the Treasury of over 4.6 billion dollars 
by intentionally lowering interest rate data below the 
statutory limit. This willful misuse of data is another afront 
to taxpayers and goes against the PBGC's initial evaluation and 
calculation which stated that, ``PBGC does not have the 
authority to provide a different rate or bifurcate the 
statutorily mandated interest rate.''
    Finally, while PBGC has loosely handled taxpayer dollars by 
bailing out failed multi-employer pension plans, it has given 
no such relief to businesses with solvent plans. Single 
employer programs have consistently paid high insurance 
premiums and consistently avoided insolvency.
    The single employer pension surplus is 44.6 billion. I 
think it is time to come to the table with policymakers and 
legislators to reward these plans for their good stewardship by 
lowering premiums. For many to achieve the American dream of a 
comfortable, and secure retirement, they need to rely on 
personal savings, social security and a pension.
    Sadly, the government today poses a threat to all three. 
Biden inflation is devaluing personal savings. Social Security 
faces a 23 percent benefit cut if Congress does not act to make 
it solvent. The security of pension programs is at the mercy of 
bureaucrats like those at PBGC.
    Retirement security is quickly eroding thanks to 
bureaucrats like yourself. We must hold these retirement 
promises made to the 31 million Americans with pension plans 
without sacrificing the promises made to the other 310 million 
Americans. Today that means embracing accountability and 
oversight, and with that, I yield to the Ranking Member for his 
opening statement.
    [The Statement of Chairman Good follows:]

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    Mr. DeSaulnier. Thank you, Mr. Chairman, and I totally 
agree with oversight, but from a completely different 
perspective. It may not be surprising. Thank you, Director, 
thank you for your service. Thank you for being here today and 
thank you for the job you have done under extremely difficult 
circumstances.
    When President Biden came into office, he inherited a 
multiemployer pension system on the brink of collapse. Many 
plans were failing, and some like Central States, were 
projected to run out of money in the next few years. More than 
1 million folks who spent their careers working in trucking, 
construction and other back breaking industries, were at risk 
of losing nearly everything they worked so hard to save for 
their families and for themselves.
    At the same time, PBGC insurance program backstopping these 
plans was heading toward insolvency in 2026. That was before 
you became Director. If plans failed, and the PBGC backstop was 
not there, these retirees would have, as the Director has said 
in his written testimony, received pennies on the dollar.
    It was not just retirees who were threatened by this 
crisis. Active workers were contributing to failing plans 
without any real help for their retirement, and without 
commensurate benefit once they retired. Due to the underlying 
pension rules, employers in failing plans were having trouble 
getting access to credit, and having their creditworthiness 
questioned, threatening their businesses and their employees 
and the retirees.
    Let us be clear, if the multiemployer pension crisis went 
unaddressed, it would not have been just workers, retirees, and 
employers who would have been harmed. Taxpayers were also on 
the hook. The U.S. Chamber of Commerce was among those to note 
that the downstream impact of plans failing, and the 
multiemployer pension system collapsing, would be an increased 
reliance on social programs and declining tax revenue.
    According to one estimate, it would cost the Federal 
Government at least 170 billion dollars over 10 years, just in 
lost tax revenue, and increased spending on social programs, if 
you had done nothing, and stayed with the status quo.
    The picture was bleak and rapidly getting worse. 
Fortunately, President Biden and congressional Democrats made 
it a priority to solve the multiemployer pension crisis as 
quickly as we could in a financially responsible way. The 
American Rescue Plan Act established a Special Financial 
Assistance program that provided sufficient assistance to 
failing plans to fully protect participants' and our economy. 
It earned pensions benefits.
    The SFA program was widely supported by a very diverse 
coalition of stakeholders, including the AFL-CIO, AARP, UPS and 
the U.S. Chamber of Commerce. How often does the U.S. Chamber 
of Commerce and the AFL-CIO come together to work on problem 
solving? That was successful because of that broad coalition.
    It also included scores of employers, businesspeople, small 
and large. They wanted to do what they were required to do and 
also be able to attract and retain good employees with 
reasonable retirement benefits. To date the SFA program has 
saved over 775,000 pensions, and protected 3,000 American 
businesses, and it is still going.
    Unfortunately, although impacted workers, retirees and 
employers reside in states represented by both political 
parties, not one congressional Republican voted in favor of the 
American Rescue Plan. Some of my colleagues continue to 
disparage the SFA program.
    Accountability? Yes. PBGC deserves credit for effectively 
and expeditiously implementing the SFA program and being 
responsive to issues raised by its Office of Inspector General 
regarding the program's operation. One such issue, which I 
suspect we will hear today, already heard about it from my 
Republican colleagues, pertains to the increased SFA amount of 
127 million that Central States received.
    First, as the Director notes in his testimony, his written 
testimony, that PBGC did not make any payments to deceased 
individuals. Let me repeat that. The PBGC did not make any 
payments to deceased individuals. No Inspector General report 
has alleged that it has.
    Second, I understand that PBGC has addressed this issue on 
a going forward basis and is working with plans that receive 
SFA to see if anything needs to be fixed retroactively, and 
obviously prospectively.
    Third, in respect to the Central States issue specifically, 
the Biden administration's announcement from last week should 
pave the way for the 127 million to be returned to the U.S. 
Treasury. That 127 million will be returned to the U.S. 
Treasury. I join with Ranking Member Scott in applauding the 
Biden administration's announcement, and their continued 
responsible stewardship of the SFA program.
    With the Special Financial Assistance Program, President 
Biden and congressional Democrats delivered a historic solution 
to an urgent crisis for American workers, retirees, employers, 
taxpayers, and business owners. I want to thank the Director 
and the hardworking folks at the PBGC for their efforts to 
implement and administrate the SFA program.
    I want to congratulate you for your dedication to solving 
this difficult problem, and I look forward to a productive 
discussion, and yield back.
    [The Statement of Ranking Member DeSaulnier follows:]

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    Chairman Good. Thank you to our Ranking Member. Pursuant to 
Committee Rule 8-C, all members who wish to insert written 
statements into the record may do so by submitting them to the 
Committee Clerk electronically in Microsoft Word format by 5 
p.m., 14 days after this hearing, which is April 3, 2024.
    Without objection, the hearing record will remain open for 
14 days to allow such statements and other extraneous materials 
referenced during the hearing to be submitted for the official 
hearing record.
    I will now turn to the introduction of today's 
distinguished witness. Today we have with us Hon. Gordon 
Hartogensis, who is the Director of the Pension Benefit 
Guaranty Corporation, or PBGC, which is located here in 
Washington, DC. We thank the witness for being here today, and 
we look forward to your testimony. Pursuant to Committee rules, 
I would ask that you limit your oral presentation to a 5-minute 
summary of your written statement
    I would like to remind the witness to be aware of your 
responsibility to provide accurate information to the 
Committee. I recognize Director Hartogensis for 5 minutes.

STATEMENT OF HON. GORDON HARTOGENSIS, DIRECTOR, PENSION BENEFIT 
            GUARANTEE CORPORATION, WASHINGTON, D.C.

    Mr. Hartogensis. Can you hear me now? There we go. Thank 
you, Chairman Good, Ranking Member DeSaulnier, and members of 
the Subcommittee. Thank you for the opportunity to testify 
today about the important work of the Pension Benefit Guaranty 
Corporation to protect millions of workers and retirees in 
multi-employer pension plans who face significant cuts to their 
retirement benefits.
    Before the enactment of the American Rescue Plan Act in 
2021, our multi-employer insurance program covering 11 million 
workers and retirees was facing a solvency crisis. The failures 
of numerous and larger multi-employer plans were imminent, and 
those failed plans would have turned to PBGC for financial 
assistance.
    PBGC's multi-employer insurance program had a small asset 
base, and little premium income. Those plan insolvencies would 
have exhausted the assets of our insurance program in 2026, 
leaving retirees in failed plans with only pennies on the 
dollar. Before ARP, workers and retirees in more than 200 
severely underfunded, multi-employer plans faced the loss of 
pension benefits they earned and needed to support them and 
their families in retirement.
    They live and work all across the country in industries 
that include transportation, manufacturing, printing, services, 
construction, fishing and hospitality. These plans are 
headquartered in 31 states including Michigan, Ohio, Missouri, 
Illinois, Texas, Wisconsin, Minnesota, Indiana, Florida, and 
Tennessee. The risk of widespread plan insolvencies, and steep 
increases in pension costs threaten the viability of many of 
the tens of thousands of companies that participate in multi-
employer plans, most of which are small businesses.
    The economic shocks resulting from the pandemic made the 
crisis even more acute. Implementation of SFA is PBGC's highest 
priority. Working closely with our board agencies we moved 
expeditiously and responsibly to implement this unprecedented 
program.
    PBGC is committed to effective stewardship of taxpayer 
funds and has identified and implemented ongoing improvements 
to the SFA program to further that goal. It is important to 
note that under this program PBGC does not make any payments to 
individuals living or deceased.
    Furthermore, there is no evidence that any of the applicant 
plans intentionally misled PBGC. PBGC has addressed OIG's 
recommendations and are resolving the issue of inaccurate 
participant census data in SFA applications. PBGC strongly 
supports payment of any SFA amount that was paid based on 
inaccurate census data.
    In November 2023, we took steps to remove deceased 
participants from the census data of current and future SFA 
applications by expanding census data requirements for all 
plans, applying to SFA, and by matching this data against the 
Social Security Administration's full file of death 
information.
    PBGC is now conducting full census data audits using the 
SSA's full death file for plans that previously received SFA. 
This process requires that plans verify the SSA death record 
matches and determine how many beneficiaries or deceased 
participants should be reflected in the calculation of the 
amount of SFA to which the plan is entitled.
    Working with our executive branch partners, we are 
implementing a repayment mechanism for any SFA amounts that 
were paid based on inaccurate census data. Central States is 
currently working cooperatively with the Department of Justice 
Civil Division to agree on the terms and conditions of 
repayments of the 127 million dollars and are optimistic that 
repayment will be complete in the very near term.
    As a result of the ARP's Special Financial Assistance 
Program, PBGC is providing crucial, financial relief to 
struggling multi-employer pension plans, ensuring that millions 
of America's workers, retirees and their families received 
their hard-earned pensions.
    To date, PBGC has approved approximately 53.6 billion 
dollars in SFA to 71 plans that cover around 776,000 workers, 
retirees and beneficiaries. We are prepared for the work ahead 
to complete the application and approval process for the 
remaining eligible plans. The SFA program has turned around the 
crisis that threatened the retirement security of millions of 
workers and retirees.
    Now, through this program, the workers, retirees, and 
beneficiaries of SFA eligible plans can rely on receiving their 
pension benefits far into the future. This concludes my 
remarks. Thank you again, and I am happy to answer your 
questions.
    [The Statement of Hon. Hartogensis follows:]

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    Chairman Good. Thank you. Under Committee Rule 9, we will 
now question witnesses under the 5-minute rule. I will wait to 
ask my questions at the end, and then I will therefore 
recognize Mr. Walberg from Michigan for 5 minutes.
    Mr. Walberg. Thank you, Mr. Chairman, and thank you Mr. 
Hartogensis for being here. It gives us a chance to seek for 
the truth, find answers because I am hearing things that I do 
not perceive to be as accurate to my understanding. Coming from 
Michigan and having met with countless number of Central 
State's pensioners, as well as employers, I understand the 
real-world consequences that would have taken place had the 
fund gone under.
    However, we in Congress are charged with being responsible 
stewards of taxpayer money, and taxpayers who did not 
participate in the pension have now been asked to take care of 
footing the bill to prop it up, so learning that the PBGC 
issued Central States 127 million dollars overpayment based on 
data that included dead participants, data that the PBGC did 
not doublecheck, I would consider that negligence.
    Let me ask you this question. On February 9th, PBGC said 
that it could not recover it is special financial assistance 
overpayments, yet on March 14th, the Department of Labor posted 
a statement that says plans must repay overpayments made based 
on dead participants on the multi-employer plan census rolls.
    Could you please explain by PBGC's response differs from 
DOL's statement, and what is the PBGC's current stance on 
whether it will recover the 127 million?
    Mr. Hartogensis. Okay. I will start with the second 
question first. Our current stance is that we are committed to 
recovering 127 million as well as any other money that was paid 
to any other plan for the, you know, for the same reason.
    Stepping back a bit. When we, you know, back in 2021, when 
we were charged with implementing the SFA program, we went 
through a process where we had--the law gave us 120 days to 
listen to stakeholders, to come up with ideas of standing up 
the program, write the regulations, come up--get those 
regulations through, you know, Board and OMB approval, and then 
get the program going.
    It was, the program was designed to get up and running very 
quickly because we, you know, we were in the middle of a multi-
employer crisis. There were many plans that had gone insolvent. 
People had--participants had taken benefit cuts. There were 
plans where the participant had taken steep cuts under----
    Mr. Walberg. I am certainly aware of that.
    Mr. Hartogensis. We--as we went to stand up the program, we 
looked at how what data could we use to cross check in that 
data, and it made the most sense at the time to look at 
government data that the 5,500 in premium filings that had been 
reported to us before the enactment of ARP.
    The idea is to make sure that they--we are looking at data 
that cannot be changed after the enactment. We then we stood up 
the program. At the time the complexity of using the social 
security death master file is that plans themselves did not 
have access to that data.
    Fast forward when our IG asked us to use the social 
security death master file, you know, to you know, to basically 
cross check the information, we agreed to do that. We ran into 
a--and we fixed the problem going forward. We ran into a legal 
snag in terms of going backward.
    The legal snag was our Office of General Counsel in 
concurrence with the--
    Mr. Walberg. They told you--you have been told now to pay 
it back.
    Mr. Hartogensis. What is that?
    Mr. Walberg. You have been told now to pay it back.
    Mr. Hartogensis. Yes----
    Mr. Walberg. Have you started discussions with the Central 
States about how they are going to return the taxpayer money? 
That is my key question.
    Mr. Hartogensis. We--the legal snag that we ran into was 
that our Office of General Counsel said that we could not 
directly, ourselves, recoup that money, the 127 million 
dollars. What we did is we worked, we reached out to executive 
branch partners, and the Department of Justice, Department of 
Labor, and worked with them to find a collaborative solution 
where we could in fact recoup the money.
    Mr. Walberg. What I understand now, and I have 8 seconds, 
but so far you have approved 53.6 billion in special financial 
assistance?
    Mr. Hartogensis. Yes.
    Mr. Walberg. What are you doing to ensure the same error 
was not also made with respect to the other payments that were 
previous? It does not look like we are learning from it. We are 
still expending.
    Mr. Hartogensis. What we have done is--so for the payments 
that have gone before, what we have done is, at this point, we 
have actually reached out to all the plans, so in total 67 
plans have been paid special financial assistance, before we 
started doing a full death master file scrub, if you will. One 
of those is Central States. There are 66 others.
    Mr. Walberg. Mr. Chair, I know my time is over, and we will 
look for further background information on it because this just 
is not cutting it. The answers here and saying that we did not 
pay out to dead people, and now seeing that we are going 
forward still doing it is a concern. Thank you, I yield back.
    Chairman Good. Thank you, Mr. Walberg. I will now recognize 
Mr. Courtney from Connecticut for 5 minutes.
    Mr. Courtney. Thank you.
    Mr. Hartogensis: You cannot hear me? Okay. Is that better?
    Ms. Foxx. Yes.
    Mr. Hartogensis: No problem.
    Chairman Good. Mr. Courtney.
    Mr. Courtney. Well, thank you, Mr. Chairman, and Madam 
Chairwoman for getting the audio where it should be, and to our 
witness for being here today. When we talk about what is not 
cutting it, this Committee actually going back, really to the 
twenty-teens, has been the place where the multiemployer 
pension crisis has been playing out year in and year out.
    I think it is important for the record to reflect that in 
2014 there was an attempt, and it was well-intentioned. The 
multiemployer pension assistance bill was enacted to try and 
give the multiemployers what was hoped for, flexibility to try 
and rescue their financial crisis.
    As your chart on page 2 of your testimony pretty powerfully 
demonstrates, is that it really was not cutting it. I mean 
these plans were still sort of cascading in a negative 
direction, and the authorities that were given in that 2014 
law, which basically allowed plans to cut benefits to retirees. 
I mean that--actually was where the burden hit, was actually 
retired workers who had paid in faithfully to their pensions, 
had negotiated in good faith over the years, giving up wage 
increases, et cetera.
    Clearly with COVID, as your chart shows, I mean we had to 
act, or these plans just would have gone belly up. I mean your 
testimony is that if we had done nothing, it would have been 
2026 before we would see sort of large numbers of bankruptcy. 
Is that correct?
    Mr. Hartogensis. That is correct, 2026 was the projected 
insolvency of the PBGC, based on large insolvencies at Central 
States and other plans.
    Mr. Courtney. Which would have affected single employer 
plans as well as multi-employer plans. I mean it just would 
have been----
    Mr. Hartogensis. Well, it would not have. The two programs 
are legally separate.
    Mr. Courtney. Separate. That is right, thank you. Okay. 
That is good to get that clarification. The U.S. Chamber of 
Commerce, who came forward to support the ARPA bill and this 
program, they actually took a look at the question of taxpayer 
impact, and their estimate was is that if again, the 
catastrophe had happened, and the multi-employer plans would 
have been basically bankrupt, that the impact in terms of 
taxpayers would be 170 billion dollars.
    That was a conservative estimate in terms of just payments 
for social assistance programs. Is that correct?
    Mr. Hartogensis. Yes.
    Mr. Courtney. If you evaluate what the choice was before 
Congress, and your agency, the fact is that the ARPA was the 
more cost-effective solution in terms of rescuing these plans, 
and not putting the hardship on retirees. Is that also correct?
    Mr. Hartogensis. Well, I think it is a combination of the 
stress on social safety net, the social safety net. Then the 
human toll of people losing their pensions, and then 
bankruptcies by employers. I think there are a lot of, there 
are a lot of collateral damage would have happened.
    Mr. Courtney. I know Ranking Member reiterated twice in his 
opening remarks that no payments were made to estates of 
deceased retirees directly from your Agency, and in fact, the 
money is still being--is still held within the Central States 
plan, is that correct?
    Mr. Hartogensis. Yes, it is.
    Mr. Courtney. This is not a situation where, you know, 
sometimes Social Security overpays a recipient at time of 
death, maybe a month or two where they have to claw it back. I 
mean this is really a negotiation that is happening between the 
Federal Government and the Central State plan in terms of 
recoupment. Is that?
    Mr. Hartogensis. Yes. It is. That 127 million dollars is in 
a ``lock box,'' so to speak, and we are currently negotiating 
with them over the return.
    Mr. Courtney. Again, it is really just a question of who is 
got the lines of authority on the Federal Government side, so 
it is the Department of Justice and the Department of Labor 
that are the primary entities that are engaged in that 
recoupment?
    Mr. Hartogensis. Yes. They are right now. The main, the 
lead is the Department of Justice at this point.
    Mr. Courtney. You totally cooperated with the Inspector 
General's Office once they flagged, or identified this issue? 
Maybe with your assistance, identified this issue? I mean this 
has not been a contested process.
    Mr. Hartogensis. No. Not at all. We cooperated immediately, 
and we fixed the problem going forward as quickly as possible 
because that was the priority. To kind of stem the problem as 
quickly as possible, and then work with our executive branch 
partners on recovering going backward, which was more 
complicated.
    Mr. Courtney. I mean based on what your data shows, this 
has been a win/win for the taxpayer. It has been a win/win for 
the retiree, and it has been a win/win for the employers. 
Again, despite the best efforts that Congress made in 2014, 
which was not working, this really ended up, again, rescuing 
the financial security of hundreds of thousands of Americans 
and their families, and protected this program in terms of its 
future existence. With that, I yield back.
    Chairman Good. Thank you, Mr. Courtney. I now recognize 
Chairwoman Foxx for 5 minutes.
    Mrs. Foxx. Thank you, Mr. Chairman. I am really deeply 
disappointed that it took dogged work from Chairman Good and me 
to get you and the Department of Labor to see reason, and to 
recover the Federal payments for dead people. It is outrageous 
that this took any time whatsoever, and that PBGC did not 
immediately own up to its mistake and recover taxpayer funds.
    In your comments you talked about getting the money out to 
the pension people, and you talk about their being taxpayers, 
but this money is coming from other taxpayers who do not have 
the benefit in many cases, of having a pension. You are worried 
about that.
    I support what my colleague from Michigan was talking 
about. You say you have paid out the 62 plans. Did you follow 
the rules on those other 62 plans that were in place that you 
failed to follow on the Central States, or are you going to get 
the money back that has been improperly paid there probably?
    Mr. Hartogensis. We are going to get the money back on all 
of them. That is----
    Mrs. Foxx. Okay. Well, my question is why did you not 
follow the plan to begin with? You had rules on what you were 
supposed to do, and you ignored them.
    Mr. Hartogensis. Are you speaking about the 2018 OIG 
report?
    Mrs. Foxx. Well, yes. You did not follow what the rule was 
for how to do this for looking at the death rolls. Why did you 
not do that? What was your interpretation that allowed you to 
ignore that?
    Mr. Hartogensis. We first of all standing up this program 
in 2021 was an unprecedented program. When we looked at it 
there was a recommendation from our IG to use the social 
security death master file in our regular financial assistance 
programs, those are direct payments to beneficiaries. This 
program was not as easy to use that because the plans 
themselves don't have access to that file.
    For us to require them to use it, they could not do it. If 
we cross checked with that they would have all failed because 
we would have found dead people they did not find. When our IG 
recommended that we do it, we said okay. We will work and make 
this program better. As an improvement, what we had to do was 
we had to get their census data ahead of time, have a pre-
application process, cross check it.
    Mrs. Foxx. You were supposed to do that at the beginning. 
My understanding was that you were supposed to do that before 
you turned out the money. I understand you have said census 
data is just one of the multiple factors that contributed to 
the imprecision of assumptions, so participant rolls and census 
data from multi-employer pension plans are fact, not 
assumptions.
    I am asking you what authority did you have for the novel 
interpretation that payments for dead people were actuarial 
assumptions?
    Mr. Hartogensis. Well, there was no blueprint for standing 
up this program. In fact, we used the data that we had. Our IG 
did not recommend that we cross check with the social security 
death master file until March 2023. Almost 2 years into the 
running of the program, and it was recommended as an 
improvement to the program, and we agreed, and we said we will 
improve the program.
    We, you know, made efforts to agree with the 
recommendations from the IG going forward. Then looking 
backward, it was more complicated to retroactively fix this, 
and audit the plans and recover the money.
    Mrs. Foxx. Well, in your opening statement it sounded like 
a lot of excuses for what has happened with the PBGC, and 
thankfully the IG was on top of this, and found 127 million 
dollars that belonged to the taxpayers of this country, not 
just the people that were getting it. We want the PBGC to do 
what it is supposed to do, and follow the rules in the future.
    We want you to go back to these other plans, which you 
indicated earlier that where you did not follow the rules 
either. It is important. This money is important. We should not 
be--you all acted like 127 million dollars was not significant. 
Do we have a commitment from you that you are going to pay 
attention to all of the money?
    Mr. Hartogensis. Yes, absolutely. You do have a commitment, 
and 127 million dollars is very significant to us. It is 
important to the reputation of the PBGC and the program, and we 
intend to go after all of the money.
    Mrs. Foxx. Mr. Chairman, one quick point of personal 
privilege please. We have two guests in the room that I would 
like to recognize, Sarah Holland, who is the Principal Clerk 
for the North Carolina Senate, and Julie Bradburn, the Counsel 
for the Rules Committee are here. They are visiting with our 
parliamentarian, and attending, and I thank you for your 
indulgence. Thank you so much.
    Chairman Good. Thank you, Madam Chairwoman. We will now 
recognize Mr. Norcross from New Jersey for 5 minutes.
    Mr. Norcross. Thank you, Chairman. Director, can you remind 
us of what year you were appointed to your position?
    Mr. Hartogensis. 2019.
    Mr. Norcross. Who was President at the time?
    Mr. Hartogensis. President Trump.
    Mr. Norcross. Okay. For the record, because apparently we 
are missing some of this. Did you make any payments to dead 
people?
    Mr. Hartogensis. No.
    Mr. Norcross. Any pensions? No. I did not think so. We are 
looking at 127 million. Myself, Ranking Member Scott, back in 
the 116th Congress served on a Joint Commission of 
Multiemployer Pensions, along with many others who brought 
incredible testimony about the complexity of the multiemployer 
system, a system that employed a--previous to that point, and 
had looked at ways of how we could fix the system that had 
inherent problems.
    I might remind people on this Committee that multiemployers 
are very different than a single employer. A single employer 
defaults, it goes under, it is pretty simple. The multiemployer 
system was set up so groups of employers could gather together 
to cover their employees.
    Unlike other systems, if an employer of the group would go 
bankrupt, the other employers picked up the unfunded balance. 
Let me repeat that. No government within themselves picked up 
when another employer went under. That is a fundamental issue 
of a multiemployer plan, and one of the complexities.
    It also has saved thousands of employer plans over the 
years. However, there were major issues with the returns and 
things that went on after this. At the end of the joint session 
there were recommendations made that were not enacted. Then 
came ARP, and what we saw because through no fault of their 
own, employees put aside their wages into a pension system that 
was collapsing.
    PBGC had indicated that if things continued the way it was 
then in 2026 the system would then collapse. Is that your 
understanding?
    Mr. Hartogensis. Yes. It would have.
    Mr. Norcross. Then in fact, I think Bobby Scott actually 
came up with a study that close to 170 billion dollars of 
direct cost to our economy would go along with that. I think 
that was low, and that could be much higher. There was 127 
million in question whether or not it should have gone because 
of the use of an improper data base.
    That has now been corrected. That has now been pointed out, 
which is exactly what should have been done. You are not going 
to get an attaboy for using the other system, but it was fixed. 
The money is coming back, is it not?
    Mr. Hartogensis. Yes, it is.
    Mr. Norcross. Okay. In your time that serving in PBGC, have 
you ever had a pensioner call you up and say, ``Do not send me 
my check. I do not deserve it?''
    Mr. Hartogensis. It has not happened yet.
    Mr. Norcross. Has not happened yet. Do you think it might 
happen?
    Mr. Hartogensis. Probably not.
    Mr. Norcross. I do not think so either. This is about 
helping ordinary Americans, the ones who want to work their 
lives, play by the rules, and have a little nest egg at the 
end. That is what we are talking about here. They want to turn 
this into something it is not, and that is incredibly hurtful. 
If you sat through the hearings that Mr. Scott and I did, to 
hear when a person loses their pension, which is their 
lifeline, something that they saved for their entire life.
    The sense that workers in both blue and red states got 
pension checks, did they not?
    Mr. Hartogensis. Yes.
    Mr. Norcross. Okay. I am just trying to understand where 
the hell this hearing is going, other than the money is going 
to get paid back. It was identified, and we are following the 
rules. The fact of the matter is, there is still a lot of 
people out there in systems that are going to be helped by the 
SFA, are they not?
    Mr. Hartogensis. Yes.
    Mr. Norcross. Okay. It might sound a little rhetorical, 
which is what I think this hearing is, a little rhetorical. 
Instead of trying to band together to help those who are 
retiring, that cannot go back out to work necessarily. I want 
to thank you for what we are doing to fix the system, what you 
are doing to get the money out each and every day, and most 
importantly, that together for pensioners whose money was saved 
because of what we did in Congress, I think it is incredibly 
important to point out.
    I implore to this Committee to remember that, and I would 
like a point of personal privilege to point out we have Michael 
Scott, who testified a while back in with the NCCMP, and we 
have Jared Karbowsky from NECA who was instrumental in helping 
get these along, and just many people in this room helped us 
help those pensioners. With that, Mr. Chairman, I yield back.
    Chairman Good. Thank you, Mr. Norcross. We will now 
recognize Ms. McBath from Georgia for 5 minutes.
    Mrs. McBath. Thank you, Mr. Chairman and Ranking Member 
DeSaulnier, and thank you, Director, for being here with us as 
well. I am glad to be here today to discuss one of 
congressional Democrats' and President Biden's greatest 
achievements, savings the pensions, and the hardworking earned 
retirements of over a million working families in this country.
    Working families that have done everything right, and they 
have contributed to their pensions for years, they deserve the 
peace of mind that what they have worked so hard for is safe. 
Today's hearing just really gives us an opportunity to raise 
awareness about this incredible achievement.
    When you spend enough time in Washington, or even listening 
to the news, it is very, sometimes it is just very 
disheartening to hear about at times the lack of progress, but 
this was different. Saving the pensions of so many Americans, 
this was truly a great achievement.
    We got to ensure that over a million people that we have 
sworn to protect and to serve, will be able to enjoy their 
golden years at home, and I am one of those too that looks 
forward to receiving a pension. Will be able to, you know, to 
spend their golden years with their families in comfort, and 
not have to worry about being forced to go back to work at the 
age of 70, or possibly lose the house that they raised their 
kids in, and that is truly not lost on me.
    The White House and Congress, we understood this urgency, 
and the magnitude of the crisis, in particular, coming through 
COVID19, and we sprang into action, and we passed the American 
Rescue Plan. Unfortunately, some of our congressional 
Republicans opposed this effort, and failed to protect 
hardworking Americans and their retirement security.
    If this was just about union members, as some have 
suggested, who let me be clear, also deserve our support, and 
should not be wrongly vilified the way that they have been 
before this Committee time and time again, then why did the 
United States Chamber of Commerce support it?
    You may hear differently from my colleagues today, but 
employers strongly supported these provisions of the American 
Rescue Plan, and we should not forget that. According to them, 
without Federal assistance, there would have been 1.3 million 
Americans who would have seen their retirement benefits cut by 
as much as 98 percent within the next few years.
    I ask unanimous consent to enter into the record two 
endorsement letters signed by dozens of companies, including 
UPS, who has a big presence in my district in Georgia, and 
throughout the entire State of Georgia. I am proud to represent 
this company, and the workers who get up every single day, and 
they move this country forward.
    UPS was one of the leading voices urging Congress to 
address the multiemployer crisis. In 2018, they testified 
before us here in Congress, and mentioned that UPS began 
contributing to multiemployer pension plans and contributes 2 
billion dollars per year to 27 different plans across the 
country. UPS understood what was at stake, and for years they 
were demanding that Congress act, and I am so grateful that we 
did.
    Chairman Good. Without objection.
    [The information of Mrs. McBath follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mrs. McBath. Director, can you talk about the importance of 
the American Rescue Plan Act to employers like UPS, and all the 
other employers that have worked so hard to help support their 
employees?
    Mr. Hartogensis. Yes. What the, you know, the SFA program 
as part of the American Rescue Plan Act did was it provided 
stability for employers that use union labor. Those that 
contribute to multiemployer plans. There was a real risk of 
insolvency of these plans, which creates withdraw liability.
    It creates a bill coming due, and that withdraw liability 
and it creates an overhang, so for a lot of employers it makes 
it harder for them to borrow money because the banks when they 
are looking at making a loan to them, see this huge obligation 
that is growing and growing from having to contribute to these 
insolvent plans.
    It becomes harder for them to get loans, and a lot of small 
and large businesses that cannot get loans when they otherwise 
would have been able to, and it creates bankruptcies in some 
cases. I mean there is a lot of collateral damage that was 
avoided by rescuing the multiemployer pension system.
    Mrs. McBath. Is there anything going forward you believe 
that we here in Congress can do to continue to make sure that 
we are sufficiently supporting families and our workers?
    Mr. Hartogensis. I think there is the possibility for 
future reforms to the multiemployer system. The ARP, you know, 
through the SFA program within ARP was designed to essentially 
rescue the program for 30 years, but looking out beyond that, 
there are reforms that we could work on with you that, you 
know, some things that came out of the 2018 Joint Select 
Committee, and other efforts that could make it even more 
solvent.
    Mrs. McBath. Thank you so much. I yield back.
    Chairman Good. The gentlelady's time is expired. I now 
recognize Ms. Hayes from Connecticut for 5 minutes.
    Mrs. Hayes. Thank you. Director, were you finished with 
your answer to the last question?
    Mr. Hartogensis. Yes. Absolutely.
    Mrs. Hayes. Thank you. Well, my remarks are similar to many 
of my colleagues, so your answer probably would have probably 
answered my questions as well because the efforts by House 
Democrats to save multiemployer pensions are important, and 
they bear repeating.
    I actually am happy that we are holding this hearing, so 
that the American people can really, truly appreciate and 
understand all of the work that we did to make sure that their 
pensions remain solvent, and that these plans that they paid 
into they could expect a return on them.
    The challenges facing multiemployer pension systems are not 
new. Democrats in the House and Senate passed the American 
Rescue Plan, which created the Special Financial Assistance 
Program, and provided the Pension Benefit Guaranty Corporation 
with the resources to save the multiemployer pension programs.
    Without the American Rescue Plan, nearly 1 million workers 
and retirees could have seen their pensions and benefits that 
they earned and contributed to disappear. In rescuing these 
failed pension plans, we saved at least 170 billion dollars 
over 10 years in lost tax revenue, and increased spending to 
care for retirees.
    Again, not a single Republican supported the American 
Rescue Plan. My question to you is how would the economic 
recovery from the COVID-19 pandemic have looked if the Special 
Financial Assistance Program had not been established?
    Mr. Hartogensis. I think No. 1, as I commented in my 
previous answer, there would have been more bankruptcies of 
small businesses. I think there would have been a lot of 
retirees that would have lost their pensions, or been stuck 
with severe cuts, and I think there would have been more draws 
on the social safety net programs.
    Mrs. Hayes. Thank you. I mean what I try to do on this 
Committee, a lot of our work is supporting employers, but also 
making sure that we are mindful of the needs of employees. We 
have to balance our legislation to make sure that we are 
meeting the needs of everyone that we serve.
    The multiemployer pension crisis harmed not only retirees 
and businesses, but also active workers. For instance, 
employers in failing plans like the Central States pension 
fund, were making pension contributions for active workers who 
would never receive a benefit equal to what they paid, and 
that's just unfair. A 2017 U.S. Chamber of Commerce report 
found workers were less likely to stay with their employer when 
they understood their pension would be less than expected.
    Director, can you explain how the multiemployer pension 
crisis negatively impacted workers, and additionally, how are 
workers today benefiting from the Special Financial Assistance 
Program?
    Mr. Hartogensis. Well, I think that you, it is obviously it 
is a retention problem if you are earning a pension, and the 
you know, the pension is, you know, 20 percent funded, or you 
know, you get to the point where you do not believe the money 
is going to be there when you retire, so you are less likely to 
stick with that company, or stay with that union, or pay into 
that pension plan.
    Mrs. Hayes. Right. I guess I would say that the people who 
rely the most on their pension plans are generally people who 
have no other income sources, or are planning for retirement 
and looking at every dollar that they've paid in. We are not 
talking about the wealthiest people who do not care what they 
are going to collect in retirement.
    We are talking about people who work every day, who pay 
into these pension programs, who understand at the time they 
are hired what their pension portfolio will look like, and make 
intentional investments into these programs throughout their 
entire careers with the expectation that they will get that 
money back when they retire.
    I am very proud of the work that we did as House Democrats 
to save those pension plans, and ultimately protect the 
retirement of American workers. With that, I yield back.
    Chairman Good. Thank you, and we will now recognize my 
friend from Virginia, Mr. Scott, for 5 minutes.
    Mr. Scott. Thank you. Thank you, Mr. Chairman. Mr. 
Director, as I understand it the plans were entitled to support 
from the Rescue fix based on the number of participants they 
had. Is that right?
    Mr. Hartogensis. That is right.
    Mr. Scott. Some of those participants may have died 
recently unbeknownst to the plan. Did the plans have access to 
data to get the most recent update, and when you are talking 
about tens of thousands of people, did the plans have access to 
data that could have revealed the number of people that have 
died?
    Mr. Hartogensis. The plans have access to private sector 
death audits, which are not as accurate as the Social Security 
full death master file.
    Mr. Scott. They got--some got a little more than they were 
entitled to. Now, the 170 million dollars that is frequently 
talked about, that was, as I understand it, it was about one 
third of 1 percent of the total payment to the plan. Is that 
right?
    Mr. Hartogensis. Yes. The Central States payment was .35 
percent.
    Mr. Scott. Okay. You have, as I understand it, fixed this 
by requiring all future applications to send you their list of 
participants that you can run through the Social Security 
system to get any recent deaths, and cover this problem?
    Mr. Hartogensis. Yes, we have.
    Mr. Scott. You are working to get information from those 
plans that have already been helped to make sure that they were 
not overpaid by running their lists through the Social Security 
system to get the most accurate data? Is that right?
    Mr. Hartogensis. Yes. We are looking back at all of those 
plans.
    Mr. Scott. Okay. We have fixed it prospectively, and we are 
working retroactively to fix this problem?
    Mr. Hartogensis. Yes, we are.
    Mr. Scott. Okay. We have heard a lot about the 170-billion-
dollar cost, not to the economy generally, but to the Federal 
budget based on decreased tax revenue and increased social 
safety net if we let these plans fail, and that is without 
considering the pain suffered by people who lose their 
pensions, by businesses going broke trying to keep the plants 
afloat.
    Small towns suffering by decreased real eState taxes, banks 
suffering by people not being able to pay their loans, 170 
billion dollars in the first 10 years, and a lot more after 
that. What was the cost of fixing the problem?
    Mr. Hartogensis. Our latest projection is 79.7 billion 
dollars.
    Mr. Scott. Less than half of the cost of doing nothing, and 
avoiding all of that pain? Is that right?
    Mr. Hartogensis. Yes.
    Mr. Scott. Okay. We have obviously been focused on the 
impact on the pensions themselves. What impact would the 
failure of these plans have on businesses?
    Mr. Hartogensis. The, like in my earlier remarks, they 
would have trouble getting loans. That is the biggest problem. 
The overhang and withdrawal liability from insolvent or 
declining multiemployer plans would make it hard for them to 
get loans, which could, which would rescue them if these 
businesses got into a pinch.
    Mr. Scott. The banks would know that they have a potential 
liability more than they would ever be able to pay.
    Mr. Hartogensis. Yes.
    Mr. Scott. Their loan would be behind that, so they are not 
credit worthy, so the businesses could not operate as a normal 
business because they cannot, if they ever had a shortfall in 
cash-flow, they cannot borrow money?
    Mr. Hartogensis. Yes. That is probably why there was 
Chamber of Commerce support for this.
    Mr. Scott. Chamber of Commerce supported the plan?
    Mr. Hartogensis. Yes.
    Mr. Scott. How many businesses have you saved already?
    Mr. Hartogensis. I think it is about 3,000 businesses that 
are involved with the 71 plans that were approved.
    Mr. Scott. Do you expect more businesses to be saved as you 
go forward?
    Mr. Hartogensis. Yes.
    Mr. Scott. Thank you, Mr. Chairman, I yield back.
    Chairman Good. Thank you, Mr. Scott, and now we will 
recognize our Ranking Member from California for 5 minutes.
    Mr. DeSaulnier. Thank you, Mr. Chairman. Director, thanks 
again for being here. Just to followup on the excellent 5 
minutes by my friend from New Jersey, who has a lot of 
experience in this field. You were nominated by the ex-
Republican President for this position, correct?
    Mr. Hartogensis. Um-hmm.
    Mr. DeSaulnier. You were confirmed by the Republican 
controlled Senate, Senator Hatch I believe was the Chair of 
Committee of Jurisdiction. Is that correct?
    Mr. Hartogensis. It was, yes. That is correct.
    Mr. DeSaulnier. You were confirmed by the Republican 
majority. This is the same time, just if memory serves me, that 
that same majority passed the largest tax cut for the top 1 
percent in the history of the country, and that money is all it 
turns out, according to the CBO, has not trickled down, has not 
gone out in the economy. It has largely been retained by that 
group. That is just an editorial comment from me.
    We have talked a lot about the top line members. We have 
got lots of stories to this Committee, and from the Select 
Committee. Testimony about individual people, individual 
stories. Those numbers. I read about a couple, a truck driver 
in North Dakota, who said, well, what am I going to do if I do 
not have my retirement?
    Another freight truck driver in the Midwest who said how am 
I going to get a job in my 70's or 80's driving a truck when I 
need to get a knee replacement? I cannot make my mortgage. Tell 
me what is the average that these people are getting in pension 
benefits, in a year based on what you did, and what the average 
would be if you did not have done what you did?
    Mr. Hartogensis. Okay. We--let us take Central States, for 
example. The truck drivers, I think the average across the 
board is about $16,000.00 a year in terms of the pension 
benefit that they would have gotten. For long-term workers it 
is close, it is somewhere between $25,000.00 and $30,000.00 a 
year. That is the approximate range.
    Mr. DeSaulnier. Let us, maybe we can give you a few minutes 
here, or moments, to just we have reiterated this over and over 
again about some of the accusations about mismanagement about 
paying checks to deceased people.
    Mr. Hartogensis. Yes.
    Mr. DeSaulnier. Do you want to add anything either on that, 
on what you did as you look back on it, and anything that has 
come up in this hearing that you would like to clarify further 
about what your actions were able to accomplish given, that you 
approach this from my view, from being very, very fiscally 
responsible?
    Mr. Hartogensis. Well, I think to add to your comment that 
you said, I mean this program has gone out to help people in 
the $15,000.00 to $30,000.00 a year pension range. These are 
hardworking folks. I think the one takeaway from the theme of 
this is No. 1, the SFA Program, the PBGC did not make any 
payments to participants, so there has been some press that we 
are--the program has been used to pay dead people. That is not 
true at all.
    All the money from this program has gone to plans based on 
a 30-year projection. We do understand that the way the program 
was set up, if we knew 3 years ago what we know now, we would 
have used the Social Security death master file from the get-
go. It is a more accurate data base.
    We did not, our IG flagged it for us in 2023. We have fixed 
this, you know, we fixed our procedures and our review process 
to use the social security death master file going forward, so 
any improvements and any approvals going forward will be using 
that. We ran into some complexities in terms of going backward, 
and recovering the money, which should be recovered for the 
taxpayer.
    We believe that we have got it fixed. We have worked with 
the Department of Labor and Department of Justice, and we 
believe we have a solution and we will be able to take care of 
it in the near term.
    Mr. DeSaulnier. Wonderful response, the IG and you working 
together to correct something that was identified with no loss.
    Mr. Hartogensis. Yes.
    Mr. DeSaulnier. You inherited all that situation, correct?
    Mr. Hartogensis. The multiemployer crisis?
    Mr. DeSaulnier. Um-hmm?
    Mr. Hartogensis. Yes. I, when I came in I think my first 
year the net position of the multiemployer program was about 
negative 65 billion dollars.
    Mr. DeSaulnier. I might add, this is something that the 
Select Committee put a lot of time into but was a national 
problem. I know Western States, for instance, I am a former 
Teamster, you know, the different financial situations for 
different parts of the country and plans are interesting to 
look back at.
    This was all inherited in a very difficult, complex 
situation that you fixed, so thank you. I yield back.
    Chairman Good. Thank you to the Ranking Member. We will now 
recognize Mr. Banks from Indiana for 5 minutes.
    Mr. Banks. Thank you, Mr. Chairman. Thank you for being 
here today. From time to time, I hear from constituents who 
these days are concerned with high interest rates, and what 
that is doing to the value of their pension plans. I am 
wondering if you can talk about how can policymakers like us 
provide solutions, and work with you to address some of those 
concerns that employers and constituents have about the value 
of their pension plan due to high interest rates?
    Mr. Hartogensis. Well, that is a great question. I think 
high interest rates actually have been generally a good thing 
for defined benefit pension plans. The way that the liabilities 
are measured, the higher interest rates shrink the calculation 
of the liabilities. It makes the plan more solvent. In fact, as 
a very recent study, the multi-employer pension system, 
including the SFA Rescue is now about 89 percent funded.
    It has improved the funding ratios, and it has actually 
made defined benefit pension plans easier for employers to 
offer, because they essentially, they can lay off the 
liabilities hedge more easily with fixed income because they 
can get more return for the money.
    Mr. Banks. You are talking about pension smoothing? What 
does that mean, and what is the difference between pension 
smoothing for multi-employer plans versus single employer 
plans?
    Mr. Hartogensis. That is a good question. The idea of 
pension smoothing is that as interest rates kind of they go up, 
they go down, you know, if you look back to between the early 
2000's to, I guess 2021, interest rates were very low, near 
zero. The idea behind that is to because the way that 
calculations are done within defined benefit pension plans, for 
the purposes of, I guess funding, like the funding rules that 
the Congress passes on them.
    Smoothing means you can kind of look back at average rates 
over a longer period of time, so that the calculations that 
happen do not jump up and down as quickly. They are more 
gradual. Then obviously when rates rose more recently, the 
smoothing makes that rise in rates as it is appreciated by 
pension plans more gradual.
    Mr. Banks. What happens when rates go down?
    Mr. Hartogensis. It is the same thing.
    Mr. Banks. It is good for high rates, but when the rates go 
back down.
    Mr. Hartogensis. It keeps the calculation of rates, you 
know, higher for longer, and then they fall more slowly.
    Mr. Banks. Okay. Interesting. Just last week the DOL 
confirmed that the Central States pension plan must pay back 
the excessive funds they received through the American Rescue 
Plan's Special Financial Assistance. Have you seen any pushback 
from Central States to pay back those funds?
    Mr. Hartogensis. No. I have not, and I believe we have been 
working with our executive branch partner agencies to recover 
that money, and actually think that that is going to be paid 
back in very short order.
    Mr. Banks. Why did the Executive Director of Central States 
pension plan ask the DOL if it was lawful to repay PBGC under 
ERISA?
    Mr. Hartogensis. That was a fiduciary concern. The idea 
being that they were concerned that if they paid back the 127 
million dollars out of plan assets, there could be lawsuits 
from participants saying why did you give our money away.
    The fiduciary regulator over pension plans is the 
Department of Labor, so for them saying you can do this, this 
is rightful, it removes a roadblock, that was helpful.
    Mr. Banks. What is your message to American taxpayers who 
are concerned about having to bailout another multi-State 
pension plan on the horizon, as they watch this situation of 
bailing out Central States? How do you explain that to 
taxpayers?
    Mr. Hartogensis. Are you talking about just the 127 
million? That issue, or the entire program?
    Mr. Banks. Well, all the above. I mean the precedent that 
we are setting and the bailout. I mean how do you explain that? 
What would be your message to taxpayers why that is fair?
    Mr. Hartogensis. I think first of all, in terms of just the 
127 million dollars that we acknowledge that that is if we had 
to do it over again, we would have done it differently, and we 
are taking all steps to correct that, and the taxpayers have a 
right to expect us to do that, and we are going to do it.
    As far as the entire program, I would say that this is a 
unique case where a series of things led to a crisis that was 
so great it was going impact large parts of the country, 
communities all over the place. You know, in many, many 
different states, and the collateral damage was going to be so 
large that it was going to be detrimental.
    That is why there was, you know, kind of support from the 
Chamber of Commerce, as well as from labor groups. I would say 
that the main focus should be let is make sure this does not 
happen again.
    Chairman Good. Thank you. The gentleman's time has expired, 
and we now recognize Ms. Manning from North Carolina for 5 
minutes.
    Ms. Mannings. Thank you, Mr. Chairman. When I was first 
elected to Congress, one of the most pressing issues facing us 
was the impending collapse of several multiemployer pension 
plans and the potential insolvency of the PBGC. Had the plans 
failed, millions of hard-working Americans would have had their 
financial security pulled out from under them.
    Thankfully, congressional Democrats took action. I was 
proud to vote for the American Rescue Plan, legislation which 
saved pension plans in danger of collapse. Every single one of 
my colleagues across the aisle voted against this vital 
legislation. We have heard a lot about Central States from them 
today, but they are focusing only on one part of it.
    Let us talk about Central States itself. We are talking 
about a plan with over 357,000 participants, including 11,700 
in North Carolina, the State where I reside, and over 1,000 
participating businesses. It was projected to run out of money 
in 2025. Can you talk about Central States, and about how 
important the plan is to the system no matter how far it 
reaches?
    Mr. Hartogensis. It is enormous. I would say, you know, in 
responding to Congressman Scott's question. He asked me how 
many employers are there? There is 3,000. I think over a 1,000 
of those are in Central States alone. There are a lot of 
employers, including UPS, and a lot of different companies that 
use trucking services.
    They would and we have looked at what states do the 
retirees reside? It is actually across the country. I mean 
that, you know, those 357,000 people, they retire, they are all 
over the place, so it would have impacted communities all 
across the country, as well as those thousands of employers.
    Ms. Manning. I imagine the Central States' failure was not 
helpful--potential failure, or looming failure, was not helpful 
in terms of PBGC's overall financial position. Is that right?
    Mr. Hartogensis. That is an understatement.
    Ms. Manning. Okay. I am sure you and your team have dealt 
extensively with Central States over the years. Can you talk 
about the peace of mind that everybody must now feel now that 
their plan has been saved?
    Mr. Hartogensis. Well, I would say to all of the 
participants in the Central States plan, I think they all can 
rest assured that they, you know, thanks to this, the ARP 
program, the SFA program, their plan is solvent, at least 
through 2051, and it depends on how things go, and they manage 
things, but perhaps even further.
    Ms. Manning. Hopefully there will be other people sitting 
in these seats dealing with that issue in 2051. I just wanted 
to bring a broader picture to the Central States discussion, 
and I am thankful that President Biden and congressional 
Democrats acted to save Central States, and other plans. Are 
there other steps that we should be considering to protect 
against the kind of crisis that Central States experienced?
    Mr. Hartogensis. There are. The way to look at it is that 
you know, this is a rescue program that takes us through the 
end of 2051. After that, there is certain reforms that could be 
made that would make the system more stable. You could look 
at--you could look at funding, you could look at the guaranty, 
you could look at premiums.
    There are a lot of different levers that you could look at, 
and we would be happy to work with Congress to come up with 
ideas that would extend the theoretical solvency of the entire 
system way beyond.
    Ms. Manning. Thank you. With that, I yield back.
    Chairman Good. Thank you, Ms. Manning. With that, I 
recognize myself for 5 minutes. I would like to take a few 
moments in our final question time here, Mr. Director, to focus 
on the stewardship of taxpayer resources, and the service that 
is provided to those we are obligated to serve, and of course, 
this should be a primary concern for every government agency 
and department.
    The White House tasked all agencies to begin scaling back 
telework policies after they, the White House, finally 
recognized the pandemic was over. I would note that my office 
never instituted telework policies, not in D.C., not in our 
District, but in the President's State of the Union address in 
March 22, 2 years ago, he pled to the vast majority of 
Federal workers will once again work in person.
    In April of last year OMB ended maximum telework policies 
and sent further instructions for agencies to develop plans to 
increase in person work. Approximately how many employees do 
you have?
    Mr. Hartogensis. We in our headquarters, we have got about 
1,000 Federal employees, and about 800 contractors.
    Chairman Good. Okay. Those 1,000 Federal employees, how 
many of those employees, or what percentage would you say have 
agreements to work remotely?
    Mr. Hartogensis. I would say the vast majority of them do. 
Actually, let me correct that. Remotely is completely wrong, I 
thought you meant telework. Remotely it is a small percentage.
    Chairman Good. All right. Telework?
    Mr. Hartogensis. Telework--it is the majority of them.
    Chairman Good. Why would they work telework instead of 
coming in the office?
    Mr. Hartogensis. Why would they want to telework?
    Chairman Good. Well, why would they--why would we have them 
do that? Why are they not coming to the office?
    Mr. Hartogensis. Well, I think during the pandemic we went 
through a couple years where----
    Chairman Good. That has been gone for a few years, so why 
would they be teleworking today?
    Mr. Hartogensis. We--No. 1 reason in the last year, in 
2023, we actually moved our headquarters, so we moved into more 
expensive real eState on 1200 K Street to less expensive, and 
as we have moved we settled into a new building, there have 
been some growing pains in the new building, and having 
flexibility has allowed us to get some of the kinks out of it.
    Chairman Good. At 1,000 employees you would say virtually 
all of them, or almost all of them, or what number telework 
versus coming into the office every day?
    Mr. Hartogensis. Well, all of them come into the--virtually 
all of them come into the office sometime.
    Chairman Good. What does that mean? Sometime?
    Mr. Hartogensis. Meaning they have different telework 
requirements. Some of them come in 4 days a week, some of them 
3 days a week.
    Chairman Good. How many will you say come in 4 days a week 
out of 1,000? Is that true that a significant number come in 4 
days a week instead of five?
    Mr. Hartogensis. I would say that is a small percentage.
    Chairman Good. Okay. What percentage come in maybe just 1 
day a week, or not at all?
    Mr. Hartogensis. I would say probably a larger percentage 
are coming in but doing more telework.
    Chairman Good. Okay. We still have most employees not 
coming in to work enough in the office. How about yourself? How 
often do you come into the office to work physically in the 
office?
    Mr. Hartogensis. I am in the office on average every other 
week.
    Chairman Good. I am sorry?
    Mr. Hartogensis. I guess, 5 days out of every ten.
    Chairman Good. Half the time you come into work.
    Mr. Hartogensis. Half the time.
    Chairman Good. The Office of the Advocate's annual report 
gives a concerning review of the customer service you provide, 
or do not provide, to plan sponsors. The report says plan 
sponsor complaints consistently involve repeat long-standing 
issues, such as case review delays, absence of oversight and 
management, communication lapse, departmental coordination 
issues, and overall lack of transparency by the Agency's 
processes and procedures.
    Could this be at all related to telework policies, which 
are no longer justified, certainly from a virus standpoint?
    Mr. Hartogensis. I think you have to look at where the plan 
sponsor's advocate is coming from. This is our interaction with 
plan sponsors during events like bankruptcies or distrust 
terminations, and these are times when they are looking for the 
PBGC to assume the liabilities of an----
    Chairman Good. I am going to interrupt you for a second and 
claim the time just because I only got a minute left, but 
suggest that we can do a better job of servicing those we are 
responsible to serve without having our whole team come into 
work every day I think is questionable.
    The last thing I just want to ask you. Open Books reported 
back in October that during your time at PBGC you spent 14 
million dollars on new furniture for 1,000 employees, which is 
$14,000.00 per employee, 14 million dollars for new furniture 
for 1,000 employees, most of which who do not come to work, 
physically anyway, so they do not need furniture at the office, 
presumably.
    That is $14,000.00 per employee. I mean $1,400.00 per 
employee might be understandable if they were all coming to 
work, $14,000.00 for employee. Can this expense be justified?
    Mr. Hartogensis. That number is a little bit misleading. At 
our headquarters, we've got as I said, 1,000 employees and 800 
contractors. If you divide by 800 instead of 1,000, or 1,800 
instead of 1,000.
    Chairman Good. That would make it like $8,000.00 per 
employee.
    Mr. Hartogensis. It is actually, the number is closer to 
$7,400.00 per employee, which is----
    Chairman Good. Most of whom do not come into the office.
    Mr. Hartogensis. Less than the average government baseline 
benchmark is around $9,000.00, so we were below the benchmark. 
I want to make one other point is that that furniture purchase 
was not a redecoration, we moved. We actually moved from an old 
headquarters to a new headquarters.
    In that move we saved 3 million dollars a year on rent, 
which over a 15 year lease is 45 million dollars.
    Chairman Good. My time is expired, so with respect for the 
Committee I need to go ahead and thank you for your comments, 
and now we will go to our Ranking Member for his closing 
remarks.
    Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you again, 
Director, and to all your staff for an excellent, excellent 
presentation today, and a great job. Just if anybody's 
watching, if they are wondering the Director's background, no 
one would accuse you of being a socialist if I, as I have been 
accused of being a socialist. In addition to who nominated you, 
and who confirmed you, you got a bachelor's degree from 
Stanford in computer science. You have got a master's degree in 
technology and management from Columbia University, and you 
went out and started businesses in the tech field.
    If anyone is watching, that is who the director is, and I 
appreciate your problem solving, your intellect, and your 
honesty here today. It shows that we can get things done when 
we have divergent party affiliations and ideology. If we work 
to the common good of what how do we solve difficult problems?
    Obviously, in a difficult situation, remind people that 
this is the recent, the last 4 years were all part of an 
international pandemic. You went in, in this instance, and 
solved something with the Biden administration with us that was 
lacking a solution prior to an international pandemic.
    Last, just on the conversations with real people. I mean we 
tend to forget about this here in Washington. The real people 
who would have suffered if you had not done what you did. We 
have talked about that. President Biden and congressional 
Democrats recognize the urgency and magnitude of the 
multiemployer pension crisis, and took as I said, historic 
action in the American Rescue Plan Act to solve it.
    Even though many of their constituents would be harmed if 
plans failed, and the system collapsed, not a single Republican 
colleague voted for that legislation. The Pension Benefit 
Guaranty Corporation quickly and effectively implemented the 
Special Financial Assistance Program and took steps to improve 
its administration.
    So far, the PBGC has approved SFA applications from 71 
plans, saving over 770,000 pensions and protecting 3,000 
businesses to date. There is more to come. As I have said 
multiple times today, there are real people, real Americans, 
behind the pensions we have saved.
    Kenneth Lee Edmundson wrote to the Joint Select Committee 
on Solvency of Multiemployer Pension Plans that, quote, from 
Mr. Edmundson, ``The loss of my pension would force my wife and 
I to sell our house. Along with this expense, and our medical 
bills over and above what our health insurance covers. I have 
to take medications to prevent a stroke from a blot clot, and 
also medication to control heart rhythm.
    I worked many long hours for 32 years and drove in all 
types of weather and road conditions, sacrificing time away 
from my family. Thinking it would be worth it because of the 
pension income I would receive on my retirement. If I lost my 
pension, it would be devastating, just trying to survive 
extremely conservatively would be impossible.
    Are we going to be put in a situation deciding between 
groceries and medications? We are innocent victims of all this, 
we just want what we earned.'' End quote.
    Again, I want to thank you all. You are not bureaucrats; 
you are public servants. I am grateful for your service and 
thank you for what you accomplished. I yield back.
    Chairman Good. Thank you, Ranking Member. Mr. Hartogensis, 
thank you. I recognize myself for closing remarks. Thanks for 
taking the time again to appear before the Committee and answer 
our questions. Unfortunately, I remain convinced that the PBGC 
is the poster child for bureaucratic incompetence and gross 
mismanagement of taxpayer dollars.
    It is clear that PBGC needs to crack down the way on the 
way it administers the Special Financial Assistance Fund to 
ensure that there are not any other million dollar mishaps, or 
billion dollar interest rate blunders. Ten years ago, Congress 
created the Office of the Advocate to scrutinize PBGC 
practices, and be a liaison for plan sponsors.
    The Office of the Advocate has offered dozens of 
recommendations over the years to improve services and 
management. After a decade of watching recommendations go 
unnoticed, this year's annual report reiterated the need for a 
change in leadership. The report recommends the creation of a 
CEO position to provide daily oversight and management of 
PBGC's senior leaders.
    This is something I believe Congress should take seriously, 
as we look for legislative solutions following this hearing. We 
need to ensure that PBGC never needs a taxpayer bailout again. 
We need to ensure all government employees are showing up to 
work and providing excellent services to Americans. We need to 
assure that those in leadership are committed to following the 
letter of the law. We need to adjust premium rates to 
accurately reflect the risk associated with pension plans.
    I think your Agency certainly has its work cut out for it, 
and this Committee is certainly going to do its job, and be 
watching this very closely. Again, we thank you for your time, 
and without objection, there being no further business, the 
Committee stands adjourned.

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    [Whereupon, at 11:35 a.m., the Subcommittee was adjourned.]

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