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Question: Does the PBGC have any forecast of its potential liability for financial assistance over the next ten years?

Answer: PBGC has forecast its potential liability for financial assistance through fiscal year 1987:


Financial Assistance

(In millions)

FY 1982
FY 1983
FY 1984
FY 1985
FY 1986
FY 1987


Question: Are the premiums under the multiemployer program sufficient to meet the amount of financial assistance likely to be provided ?

Answer: The annual premium for the multiemployer program is currently $1.40 per participant and will increase in scheduled steps to $2.60 per participant for 1989 plan years. The multiemployer program covers about 8 million participants. PBGC expects that multiemployer premium income will be sufficient to meet estimated financial assistance payments.


The Multiemployer Pension Plan Amendments Act of 1980 requires the PBGC to establish two new supplemental programs for multiemployer plans in Fiscal Year 1982. One would guarantee benefits that exceeded the statutory limitations on basic benefits. The other would reimburse multiemployer plans for deficiencies caused by the bankruptcy of a participating firm.

Question: What is the current status of these new programs?

Answer: On April 30, 1982, the Chairman of PBGC's Board of Directors submitted proposed legislation to the Speaker of the House and the President of the Senate that would amend section 4222 of ERISA to delete the May 1, 1982, deadline for establishing a mandatory reimbursement program. The amendment would make establishment of a reimbursement program discretionary with the PBGC.

On February 26, 1982, PBGC submitted to the Office of Management and Budget a proposed regulation establishing a supplemental guarantee program in accordance with Executive Order 12291. The proposed regulation should be signed and published in the Federal Register shortly.

Question: How does the PBGC determine the premiums to be charged for these new guarantees?

Answer: The proposed annual premium for the supplemental guarantee program is the product of the number of plan participants, the number of units of supplemental coverage in effect for the plan for the year, and the supplemental premium rate of $0.30. To determine the supplemental premium rate, the premium rate ($2.60) for basic benefits was converted to a premium per $1.00 of basic benefits guaranteed by dividing the basic premium rate ($2.60) by the

highest average guaranteed monthly accural rate ($8.95) for multiemployer plan participants.

A unit of supplemental coverage is $1 per month times a participant's years of service. Thus, for a participant with 20 years of service, a unit is $20 a month. To provide that participant supplemental coverage of $60 per month, a plan would purchase 3 units ($60 = $20) at a premium of $0.90 (3 x $0.30).

Question: Does the PBGC double check its estimates with independent actuaries?

Answer: Yes. PBGC contracted with an independent actuarial consulting firm to review and comment on the proposed supplemental guarantee program. The firm concluded its report with the following statement:

In summary, relating the supplemental premium to the basic premium the conservative way in which this was done by incorporating a time lag in the premium/benefit ratio, the underwriting control of the PBGC will apply, and the reasonable claim frequency which emerged from our test on stationary populations leaves us without criticism of the premium structure and with confidence in its reasonableness.






SUBCOMMITTEE PROCEDURE Senator ABDNOR. Next, we will hear from Robert Collyer, the Deputy Under Secretary for Employment Standards.

Mr. Secretary, we welcome you to the committee, too, this morning. We are moving right along here.

I see you have some people with you, so if you will introduce them, we will let you proceed as you wish.

As you heard me say earlier, the entire statement will be placed in the record. You can proceed any way you wish.


Mr. COLLYER. Thank you and good morning, Mr. Chairman.

I would like to introduce Karen Severn, on my left, Director of our Division of Budget and Finance.

Larry Rogers, to my immediate right, is Director of the Office of Program Development and Accountability.

And Mary Ann Wyrsch, is Director of the Office of Budget for the entire Department.

Mr. Chairman, I will not read the statement. I will visit with you for a few minutes about the Employment Standards Administration and what we are doing and what we plan to do in the future.

OVERVIEW OF FISCAL YEAR 1983 REQUEST Our overall request of $1.93 billion is up from $1.878 billion in 1982, an increase of 3.2 percent. S. & E., salaries and expenses, for 1982 was $182 million, and we are asking for almost $191 million, an increase of 4.8 percent.

I have to point out that two-thirds of that increase in salary and expense is mandatory current services. It is not discretionary. It is pay increases and that sort of thing. We have to have the funds for current cperations.

The other third or about $3 million is virtually all for the continuation of our 5-year automatic data processing plan. We are trying to get off the manual systems, get the numerous details of the Employment Standards Administration, onto the computer so we can have much, much better and more accurate records, and we will need fewer people to handle the clerical process.

Even though our request is a barebones request and we have cut many things to preserve this 5-year continuum, if we lose 1 year within the 5, we could lose more than 1 year's funding because we could lose people, lose the contractors, and the momentum we have built up in this 5-year plan.

I am very impressed with what we see in the future in terms of capabilities through our computer systems.

Last year, I established an internal control unit because one of my highest priorities throughout ESA is the control of fraud, waste, and abuse. And this internal control unit is composed of people who have varied backgrounds, Ph. D., CPA, people of this sort, who have access to all of ESA's records. They report directly to me on matters of fraud.

They are looking for, not just evidence of fraud, but gaps in our control systems that might allow for fraud at some future date and recommending to us changes that might be made in our programs to prevent waste, abuse, and certainly fraud.

WORKERS' COMPENSATION PROGRAMS In the Office of Workers' Compensation Programs, we have three separate workers' compensation programs that we handle. The black lung program was in desperate need of change statutorily. We accomplished that last year, just 4 months ago. We passed our black lung bill.

The black lung program was in debt to the Federal Treasury to the tune of $1.5 billion. We have doubled the tax on coal. This was agreed in the bill. All the interested parties contributed to the compromise.

We tightened eligibility so only those people with black lung who are disabled can get into the program. Such was not the case prior to the time we passed that legislation.

As a result, the debt, the advances we were having to take from the Federal Treasury, are dropping. The number of claims is dropping. The program is coming down to something more like a reasonable workers compensation program, a major advance.

We also administer the Longshoremen's and Harborworkers' Act. I does not rely on Federal money. The benefits are paid by the employ ers through either self-insurance or insurance. That act is badly in need of revision.

Senator Nickles has a bill in his committee at this time, S.1182, an we support major changes and many of the recommendations that the have in that bill.

We have other things we have suggested to the committee. And wi are going to urge the passage of longshore reform this year. Man things need to be done.

The Federal Employees Compensation Act is the act that covers the million Federal civilian employees. We pay the benefits out of Treasur dollars and are reimbursed from the agencies for whom the peopl work.

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