Summary

The Pension Benefit Guaranty Corporation (PBGC) insures the pension benefits of more than 40 million Americans participating in about 85,000 private-sector plans. Although PBGC has an automated premium accounting system to process and account for the insurance premiums received from plan sponsors, this system has not been fully operational since 1988, when PBGC unsuccessfully tried to modify it in response to new legislative requirements. This failure is due mainly to insufficient management attention to efforts to modify the current system and procure a replacement system. PBGC, acknowledging this weakness, instituted an interim solution in July 1992 to beef up senior management oversight of the premium accounting system initiative. This is a step in the right direction, but PBGC must continue to make management of the system an ongoing priority, even after the replacement system is in place.

GAO found that: (1) the PBGC premium computerized accounting system has undergone a two-phase modification and restoration, and the first phase has restored partial system function, but the second phase remains incomplete; (2) lack of sufficient oversight, management, technical expertise, and institutional knowledge has resulted in delays; (3) the system posts total payments, makes refunds, and issues past-due filing notices and statements of account prior to 1987; (4) the system lacks adequate documentation, uses outdated technology, incorporates design and construction inflexibility, and cannot identify variable rates payment or generate statements of accounts for after 1987; (5) modification estimates for the system involve adding or altering 23,000 lines of system code, requiring six staff members; and (6) new system requirements must include flexible and accurate recording of premium operations, correspondence generation, and the ability to respond to legislative changes.