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
2026-13124 — Allocation of Assets in Single-Employer Plans; Interest Assumptions for Valuing Benefits
Starting July 31, 2026, the Pension Benefit Guaranty Corporation (PBGC) is updating how it calculates interest rates used to value benefits in single-employer pension plans that are ending. This change affects plan sponsors and employers involved in these plans, helping make sure benefit values match current market conditions. If you’re involved with these plans, get ready for new numbers that could impact how much money is set aside or owed.
2026-12648 — Submission of Information Collections for OMB Review; Comment Request; Direct Express Enrollment Form
The Pension Benefit Guaranty Corporation wants to keep collecting info to help people sign up for the Direct Express debit card, which lets federal benefit recipients get their money electronically. They’re asking for public feedback by July 24, 2026, to make sure everything’s clear and easy. This won’t cost anyone extra but helps keep benefits flowing smoothly and safely.
2026-12100 — Technical Amendments: Special Financial Assistance
The Pension Benefit Guaranty Corporation is updating rules about special financial help for pension plans. These changes clarify how plans can invest the money, when PBGC approval is needed for certain claims, and remove a rule about using funds for health costs. Plan managers and employers should note these tweaks and send comments by August 17, 2026.
2026-10805 — Submission of Information Collection for OMB Review; Comment Request; Liability for Termination of Single-Employer Plans
The Pension Benefit Guaranty Corporation (PBGC) wants to keep collecting info about who’s responsible when single-employer pension plans end. This affects companies and workers involved in these plans and helps make sure everyone knows their duties. You’ve got until June 29, 2026, to share your thoughts, and this process keeps things running smoothly without extra costs right now.
2026-09334 — No Adjustment of Civil Penalties for Inflation
Good news for plan sponsors and employers: the fines for missing important pension notices won’t go up in 2026. The Pension Benefit Guaranty Corporation is keeping penalty amounts the same as 2025 because there’s no inflation increase this year. So, if you owe a penalty, it’ll max out at $2,739 or $365 depending on the rule—no surprise hikes!
2026-07832 — Submission of Information Collections for OMB Review; Comment Request; Multiemployer Plan Regulations
The Pension Benefit Guaranty Corporation (PBGC) is asking to keep their paperwork rules for multiemployer pension plans the same and wants your thoughts by May 22, 2026. This affects employers and workers involved in these pension plans, helping keep things clear without adding new costs or deadlines. It’s all about making sure the info collected stays useful and easy to handle.