PBGC Initiatives Focus on the Future

January 16, 2009 (PLANSPONSOR.com) - There has been a remarkable continuity of leadership at the regulatory bodies that affect and influence plan sponsors over the past eight years.

Secretary of Labor Elaine Chao has been in that role since 2001.   She is not only the only remaining member of the original Bush cabinet, she is the longest-serving Secretary of Labor since World War II.   Assistant Secretary of Labor Brad Campbell was not confirmed until August 2007 (see  White House Taps Bradford Campbell for EBSA Post ), but he took over from Ann Combs, who held the post from early in 2001 until late 2006 (see  PLANSPONSOR Legends Awards: Ann L. Combs ).

However, during one of the more tumultuous periods in its 34-year history, the Pension Benefit Guaranty Corporation, or PBGC, which insures the nation's private-sector pensions, has been guided by no fewer than three executive directors, and two interim directors (more accurately, one interim director twice) since 2001 (see  Chao Names Kandarian Head of PBGC ,  Ex-Kansas Congressman Named as Acting PBGC Chief , Belt Named to Head PBGC ,  Snowbarger Retakes PBGC Top Spot , White House to Nominate New PBGC Director ) ⁽¹⁾ .  

That has not kept the PBGC from undertaking a number of significant initiatives over the past eight years, as it transformed itself from a manager of liabilities imposed on it by events outside its control and adopted a more proactive, if not preemptive, involvement.   However, the initiatives undertaken in recent months may turn out to be the most momentous of all.

Among the new provisos of the Pension Protection Act of 2006—widely deemed the most significant piece of pension legislation since ERISA, which gave birth to the PBGC, and one indicative of the concerns attendant with the financial viability of the nation's private-pension insurer—was a requirement that the position of executive director of the Pension Benefit Guaranty Corporation (PBGC) be vetted by the U. S. Senate.   Enter Charles E. F. Millard, nominated by President Bush in May 2007, and confirmed for the position in December of that year (see Millard Confirmed as PBGC Director ).  

While the PBGC had, in recent years, adopted a more assertive policy in intervening to preserve corporate pensions at troubled firms (see  PBGC to Airlines: Pension Contributions Still Required ,  Pilots' Union "Deplores" PBGC Action ), under Millard's leadership, the agency has moved further and faster than at any time in recent memory.   The PBGC has gotten involved as an active participant in bankruptcy discussions (see  PBGC Threatens $900M Delphi Court Pension Demand ), and has even gone so far as to actively work with companies to help them take back their pension obligations when they are financially ready to do so (see  PBGC Applauds Dana Corp's Bankruptcy End ,  PBGC Commends Towers Automotive for Keeping Pension Obligations ).   Just this month, the PBGC notified the U.S. Bankruptcy Court for the Southern District of New York that it would represent the government if a corporate plan were to fail as a result of losses linked to the alleged $50 billion Ponzi scheme of investment manager Bernie Madoff (see  PBGC Stakes Out Place in Madoff Proceedings ).

¹ In fairness, at all of these agencies, the true continuity comes from the thousands of dedicated public servants who serve there regardless of the party in power in Washington—as their leaders would surely all agree.