PBGC Proposes Improvements to Rules on Recoupment of Benefit Overpayments

Published January 21, 2025

The Pension Benefit Guaranty Corporation (PBGC) issued a proposed rule to improve its rules on recoupment of benefit overpayments under PBGC’s insurance program for single-employer terminated plans trusteed by PBGC. The amendments would provide clarity and predictability, making the repayment process easier to communicate to participants and for participants to understand. The amendments would also allow for greater administrative efficiency. 

The major provisions of the proposed rule would amend PBGC’s recoupment rules by:
  • Simplifying the recoupment methodology to eliminate the actuarial reduction (capped, generally, at 10 percent of a participant’s monthly benefit), and instead recoup at a flat rate of 5 percent of a participant’s monthly benefit;
  • Waiving overpayment amounts of $250 or less;
  • Eliminating recoupment of a participant’s overpayment from a participant’s surviving spouse or other designated beneficiary;
  • Eliminating recoupment on a revised benefit determination, except under specified circumstances such as where there is a post-benefit determination qualified domestic relations order (QDRO).
Major provisions of the recoupment rules that are not changing are as follows:
  • No interest is ever charged on net overpayments;
  • Recoupment ends one month early if the amount remaining to be recouped in the final month is less than the amount of the monthly reduction; and
  • Recoupment constitutes full repayment of the net overpayment.
The proposed rule would also codify PBGC’s policy of administrative correction to correct payment errors and clarify when PBGC uses recovery methods instead of recoupment.

Comments are due 60 days after publication in the Federal Register.