PBGC Hires Three to Manage $2.5B in Private Equity, Real Estate Assets

December 22, 2008 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) announced the selection of "strategic partners" to manage $2.5 billion in private equity and real estate assets.

According to the announcement, investment firms BlackRock, Goldman Sachs, and J.P. Morgan will also provide support to PBGC’s in-house investment staff. The agency said each partner will offer specialized services that build its institutional capacity.

“These relationships will benefit the PBGC, not only with private equity and real estate investments, but in risk analytics and mitigation, consolidated reporting and staff augmentation.  These resources will put the PBGC on a more strategic foundation for its future,” said PBGC Director Charles E.F. Millard, in the announcement.

Millard appeared before a U.S. House committee in October to defend the agency’s adoption of a new investment policy in February (See Millard Defends PBGC Investment Policy Change ). The new policy, which included a shift to more stocks and alternative investments, was seen as too risky by some (See GAO: PBGC Investment Policy May be Riskier than First Thought ).

Millard said the policy would help the PBGC narrow its deficit, and the agency did manage to trim its funding deficit for single-employer plans by nearly $2.5 billion over the past year (See PBGC Funding Deficit Narrows, But… ).

The nation’s private pension insurer is also looking to improve its securities lending program (See PBGC Taking a Fresh Look at Securities Lending ).