and depend on it. I think that is admirable. Too often, in Washington, people who run agencies have a disconnect with the people that they serve. It is very important to reestablish that, and I think they have done that. There has also been about 21 years of budget shortfalls in this Agency, which has been very disturbing. And it is good to note that over the last four consecutive years we have had a surplus. I think that is a major and very positive indication of movement in the right direction, as well as a downturn in the number of pending benefit determinations that are still pending and have been going down in each of the last 5 years. So there is progress that is being made. Is it a perfect Agency? No. Is there a perfect Agency in Washington? No. I mean, everybody can stand improvement, and that is what we are looking for here today. And I look forward to all of our witnesses and their recommendations. Thank you, Mr. Chairman. The CHAIRMAN. I will try to accommodate Senator Bond or Senator Kerry if they are under tight schedules when they show up, if they want to make statements, because they have to go to another committee meeting. Both staff can inform them that I am willing to do that to help them. Because we need to conclude the hearing at 10 a.m. to attend the Finance Committee mark-up, as I have already suggested, I thank the Inspector General for his preparation to provide an introductory overview of the PBGC. And in the interest of time, I want to dispense with that opening and make it a part of the record. Now, I introduce the panel, and I will introduce the entire panel, and then we will start with Mr. Parks and end with Mr. Strauss. Thomas A. Parks is a constituent of mine from Cedar Rapids, IA. And he has come here under extreme circumstances because he has been with a friend who is ill in Alaska, and we appreciate very much your taking time out of your schedule to come. Now, we have another person, Dr. Wilde, who evidently because of plane problems may not be able to get here. He happens to be from Dale City, CA, but is now in Chicago, it is my understanding. He is going to, if he gets here, will testify on behalf of his mother, Dorothy Jasco. If he does not come, we will be able to put his statement in the record. Then we have Bonne McHenry, a former contract employee of the Corporation, PBGC. She is from Merrimack, NH. Then, we have the Inspector General of the Corporation, Wayne Robert Poll. Thank you for coming. And Barbara Bovbjerg, Associate Director of Income Security at the General Accounting Office. Thank you. Robert H. Hast, Assistant Comptroller General for Special Investigations at the General Accounting Office. And then David Strauss, our Executive Director of the Pension Benefit Guaranty Corporation. Thank you. Now, we will start with Mr. Parks. STATEMENT OF THOMAS A. PARKS, CEDAR RAPIDS, IA Mr. PARKS. Thank you, Senator. Let me also preface my remarks that I have no interest in negatively complicating the lives of anyone at the Pension Benefit Guaranty Corporation. My sole motivation is to illuminate past problems with and within the PBGC, based on my experience, so as to hopefully benefit what I suspect are probably thousands of retirees highly dependent upon the PBGC. That philosophy was enunciated in my letter to the PBGC of April 3, 1996, after approximately 41⁄2 years had elapsed before my situation was finally resolved in August 2000. That final determination, incidently, came after approximately 8 years after the PBGC became involved in this plan. In that 1996 letter, I stated: "My experience suggests to me that problems of this nature reflect much greater problems at the top. This does not necessarily mean at the supervisory level, it may be a funding issue or something comparable and equally difficult to resolve." "For that reason alone, I am writing to you to ask that my unanswered letters be answered and my case resolved with rational expediency and that you allow me the benefit of your insight into the overall question before I take this matter up with others who I am reasonably certain will act." To that April 1996 letter I attached an earlier fax to the PBGC in which I recited a litany of mistakes, some of which involve my receiving, without explanation, a substantial check drawn on a bank other than that which the PBGC had indicated would be transmitting funds and against a company pension plan unrelated to me in any way. Subsequently, I received another check duplicating the amount of the first check, drawn upon the correct PBGC bank. I returned these funds to the PBGC via a certified check. Like other communications with the PBGC, these received no clarifying response. Instead, in April 1996, I received a request for documents that duplicated documents first supplied November 27, 1995. Subsequently, I received a surprising telephone inquiry from the PBGC asking if I could illuminate the cause of errors that were obviously internal to them and about which I was understandably uninformed. My response simply reiterated details previously supplied. Following months of frustrating absence of any closure on questions and issues put before the PBGC, in January 1997, I requested the assistance of Congressman Jim Leach. In my judgment, the initial response to the Congressman's office was evasive and of little assistance, except to confirm that some undefined action was in progress. Subsequently, in a letter dated February 3, 1997, a full years after the applicable pension plan had been terminated with the PBGC's involvement and 11⁄2 years after my retirement and filing for benefits, the PBGC confirmed their appointment as trustee, which had actually happened 6 months previously. The PBGC then, in February 1997, proceeded to send auditors to my former employer's office to audit materials readily available from Aetna from 1992 forward. Nothing further was heard from them until 8 months later, when they telephoned my employer's former plan administrator, asking questions previously answered many times and suggesting that they had "misplaced"-their words-applicable files and were "temporarily stymied." Consequently, on November 12, 1997, I requested assistance from the office of Senator Charles Grassley and provided that office with a detailed recap of pertinent communications with the PBGC extending from September 1991, over 6 years. That communication and attachments are included herewith as a matter of record. The PBGC, in December 1997, responded to Senator Grassley, stating, among other things, that "our processing schedule calls for final benefits to be calculated by the end of 1998," which actually did not occur until August 2000. In this response, the PBGC expressed concern over the length of the process and further stated that their problems resolution officer had been asked to monitor my case to ensure that it stays on track. I regret having to add to this litany of problems the fact that the final determination letter, ultimately received on August 14, 2000, was found to be incorrect and was superseded by what I presume is the ultimate final determination letter, dated August 18, 2000. In all fairness, I must add that this error was found by the PBGC without input from me and that they acted quickly to make the necessary corrections. This quick action suggestions or appears to suggest some internal improvements have taken place, but this appearance of improvement is so recent that I am hesitant to rely upon it. The fact remains that eight long years were consumed in the process between when the PBGC first became involved and their final determination of my case. During much of this time, I was uncertain as to benefits due me and aware that, upon final determination, I might have a partial repayment obligation rather than an increase in the monthly interim payment being received. Those interim payments began at $1,006 in May 1996 and were provisionally adjusted upwards to $1,257 in February 1998. In their final determination letter, the PBGC advised that my final entitlement would be increased by 83 cents. Your attention is drawn to Attachment 1 to my November 12, 1997, letter to Senator Charles Grassley. That attachment, dated June 4, 1992, authored by my former employer's pension plan administrator, states that upon my retirement my benefit payment will be $1,257.88, only a nickel variance from the number determined by the PBGC to be applicable after 8 years of expended re sources. When one compares the years and resources consumed to arrive at such an insignificant change, it is difficult to make a positive statement, even given that I do have an appreciation for fiscal and accounting procedures which might justify such a modest adjustment. The 1992 estimate authored by my former employer's plan administrator was not mere speculation. It was predicated upon the facts that Aetna's actuaries had monitored and reported upon the applicable plan for benefits for many years. Additionally, in compliance with Department of Labor requirements, the company's plan numbers and Aetna's numbers had been audited and verified annually by auditors such as Price Waterhouse and Arthur Ander son. The PBGC's refusal to work with this certified data and thus save years of expensive efforts, only to essentially arrive at an identical conclusion, appears to reflect that other situations possibly surfaced unsatisfactory detail. However, to consequently adopt an attitude that one rule or experience fits all is tunnel vision, causing corporate and human misery best avoided by working with more commonly accepted business practices. My decades of experience working for and operating small businesses dictates a strong position opposing such waste. I have also held management positions in Fortune 500 companies and can attest that their ability and resources to deal with such problems are more in tune with these bureaucratic procedures, which have the potential of crushing small businesses. In most cases, where one rule or procedure is assumed applicable to all businesses, small or large, the small company operates at a distinct disadvantage. In summary, the delays and absence of communication over many years perpetuated uncertainties and prolonged determination of benefits to which I was, and am, entitled. I am fortunate that my financial survival was not at stake, but I suspect that many others suffering this treatment are injured or at least highly inse cure. As I reflect upon this experience, I am led to speculate that the root problem is or was a lack of adequate resources to cope with a crescendo of plan failures during the 1990's. If that is the case, the fault rests not with line personnel, but rather with top management or funding sources or both for having failed to recognize the magnitude of the needs. Thank you very much. [The prepared statement of Mr. Parks follows:] |