This probably won't solve your problem but I don't think you need to explicitly open STDOUT & STDERR with IPC::Open3, I haven't used pgp but aside from a problem with pgp accepting the input (as BrowserUk showed) this should also work and is a bit simpler-

# example open3() code only
  my $pgp_command = "pgp --key-add temp_pgp_key.asc --with-private";
  open3(*PGP_IN, *PGP_OUT, *ERROR, $pgp_command);
  print PGP_IN "\n";
  close(PGP_IN);
  my @return = <PGP_OUT>;
  close(PGP_OUT);
  my @error=<ERROR>;
  close(ERROR);
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