Pension Agency Caps Overpayment Clawbacks at Five Percent
Published Date: 7/6/2026
Proposed Rule
Summary
The Pension Benefit Guaranty Corporation is updating how it takes back money when it pays too much in benefits. Now, they'll recoup a flat 5% from a participant’s monthly benefit and won’t take money from surviving beneficiaries anymore. These changes affect people in single-employer plans and could make repayments simpler and fairer starting after the comment period ends on September 4, 2026.
Analyzed Economic Effects
5 provisions identified: 3 benefits, 1 costs, 1 mixed.
Flat 5% Recoupment Rate
PBGC would replace its actuarial recoupment method (generally capped at 10 percent) with a flat 5 percent reduction of a participant’s monthly benefit for recouping net overpayments. PBGC estimates average collection under the current method is 51% of a debt and that would increase to 65% under the flat 5 percent proposal; PBGC also reports the average per-participant amount currently repaid is $388 per year.
Waiver for Small Overpayments ($250)
PBGC would not seek recoupment for net overpayments of $250 or less. PBGC estimates that about 500 payees would avoid a total of $5,000 in recoupments each year because of this de minimis exception.
No Recoupment From Survivors
PBGC would eliminate recoupment of a participant’s remaining net overpayment from a surviving spouse or other designated surviving beneficiary. PBGC estimates this change would save about 4,000 beneficiaries a total of approximately $900,000 per year.
Administrative Correction and Recovery Rules Codified
PBGC would codify its policy of first attempting administrative correction (e.g., ACH reclamation, stop-payment, short benefit suspension) before treating an error as a net overpayment, and would use recovery when administrative correction is unsuccessful or where recoupment is not possible. PBGC lists situations where recovery typically applies, including payments after an unambiguous payment end date, payments based on false information or error by the participant, and where PBGC believes the payee knew or should have known of the error.
No Recoupment on Most Revised Determinations
PBGC generally would not seek recoupment based on a revised benefit determination, though it would still adjust future benefit amounts. Exceptions when PBGC may recoup on a revised determination include payments based on false information/error by the participant, cases where PBGC believes the payee knew or should have known the payment was in error, benefit reductions by settlement agreement, and post-determination qualified domestic relations orders (QDROs). PBGC estimates 270 payees would avoid a total of $8,640 in recoupments each year under this change.
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Key Dates
Department and Agencies
Related Federal Register Documents
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