WASHINGTON – Sen. Chuck Grassley of Iowa is seeking a Government Accountability Office (GAO) review of the Department of Labor’s oversight of the financially troubled Central States pension fund.
“The Department of Labor has considerable oversight over the Central States pension fund,” Grassley said. “It appears that the department hasn’t done enough to prevent a major failure of the fund that could mean a big financial hit for retirees in Iowa, Nebraska and elsewhere around the country. A review of the Labor Department’s actions from the Government Accountability Office is necessary. Central States plan beneficiaries deserve to have a better understanding of what led to the financial failings of Central States and ultimately put their retirement at risk. Congress needs to have a better understanding of what happened with the Department of Labor’s oversight of this pension plan so that any corrective actions, if necessary, can be taken.”
In his letter to the GAO, Grassley said that for more than three decades, Central States has operated under a federal court-ordered consent decree obtained by the Labor Department following its investigation that found gross mismanagement and self-dealing by fund managers. Among other things, the consent decree granted the Labor Department considerable oversight authority on the selection of independent fund managers, as well as to changes in investment strategies, among other oversight powers. Grassley wrote that he is unaware of any GAO review of the Labor Department’s role in overseeing the pension fund since 1985.
Grassley wrote, “Concerns over the solvency of these plans are heightened due to large fiscal deficits currently facing the Pension Benefit Guaranty Corporation’s (PBGC) multiemployer guarantee program. As a result, should Central States, or another large plan become insolvent, PBGC would likely not have enough funds to make full guarantee payments to plan beneficiaries who would see much of their retirement savings wiped out.” He said “the time is ripe for GAO to update Congress on DOL’s oversight of Central States.”
Grassley’s letter is available here.
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