PBGC Head Fires Back on GAO Investment Policy
Criticisms
August 18, 2008 (PLANSPONSOR.com) - The nation's
private-sector pension insurer on Monday defended itself
against questions raised in a new Congressional oversight
report about the Pension Benefit Guaranty Corporation's
(PBGC) new investment policy.
The Government Accountability Office (GAO) report,
"Implementation of New Investment Policy Will Need
Stronger Board Oversight," raised questions about whether
the PBGC board has been sufficiently involved in
approving investment policy changes in concept -
including the one the board okayed in February 2008
(See
PBGC Makes Big Shift
to Stocks, Alternatives
).
Charles E.F. Millard
The GAO also questioned whether the board
sufficiently monitored the implementation of investment
changes and suggested a variety of changes in PBGC
governance (see
GAO: PBGC Investment
Policy May be Riskier than First Thought
).
"The Board of Directors provides consistent and
robust oversight of PBGC's investments," said Charles E.F.
Millard, Director of the PBGC, in the pension agency's
Monday statement. "The current Board and its
representatives have been deeply involved in the crafting
of our new investment policy, and will continue to oversee
its implementation."
Responding to GAO concerns the latest PBGC
policy may be overly risky, Millard offered "Other than
some process-related criticisms, the GAO study confirms
that the Board was correct to adopt the new diversified
policy.
Under all scenarios tested by the GAO, the new
policy's level of risk-standard deviation--is consistent
with the best practices of other large institutional
investors.
"We agree with GAO's emphasis on the importance of
continued measurement and mitigation of risk," Millard
continued in the statement. "That is why we have performed
additional sensitivity analyses, and will do so going
forward. This policy's use of risk is prudent by any
standard.
Members of Congress have called for more
diversification of PBGC's investments, and this policy is
far more diversified than the previous policy.
Most important, it addresses the greatest risk of all:
The risk that the Corporation could someday fail in its
commitment to the 1.3 million Americans who depend on it
for retirement income."
The GAO report is available
here
.
Fred Schneyer
editors@plansponsor.com