Eliminating Overpayments Waste
Pension Benefit Guaranty Corporation (PBGC) Improved Process for Obtaining Return of Overpayments
Industry:
The Pension Benefit Guaranty Corporation (PBGC)
Problem
The Pension Benefit Guaranty Corporation (PBGC) protects the retirement incomes of more than 44 million American workers in more than 29,000 private sector, defined - benefit pension plans. PBGC was created by the Employee Retirement Income Security Act of 1974 and is headed by a Director who reports to a Board of Directors consisting of the Secretaries of Labor, Commerce and Treasury; with the Secretary of Labor serving as Chair. The Corporation is aided by a seven member Advisory Committee appointed by the President of the United States to represent the interests of labor, employers, and the general public.
The PBGC had significant problems with their payments process which caused them to make overpayments due to paperwork and oversight errors. Resulting from a lack of communication between departments and confused areas of responsibility, the overpayments caused a significant amount of rework in the form of a collections process that was needed to get the overpayments returned.
Approach
To address these issues, the PBGC formed a team tasked with performing a Lean project called a Kaizen event to improve the collection of the overpayments. The team used Lean tools to identify issues and develop solutions that resulted in significant cycle time and cost reductions. The team analyzed current performance data and identified rework loops and other delays that helped them identify several solutions. The team developed a new process for issuing notification letters to collection targets and conducted several pilot tests.
Results
The team’s solutions significantly eliminated the waste in the process and led to reducing the cycle time to issue a collection letter by 45%. This meant the team removed 30 days of waste from the process.
