Senate Committee Weighs in on PBGC

Today the U.S. Senate Special Committee on Aging Chairman will hold a hearing – provocatively titled ‘No Guarantees: As Pension Plans Crumble, can PBGC Deliver?’ – to “consider whether the federal government’s Pension Benefit Guaranty Corporation (PBGC) has the capability to fulfill its mission to insure the pensions of nearly 44 million Americans, at a time when several of the country’s largest automobile companies are teetering on the edge of bankruptcy,” according to a press release. 

In a January  update of its listing of high-risk areas, first detailed in January 2007, GAO said that although the combined net financial condition of PBGC’s single- and multi-employer insurance programs has recently improved, the programs and the agency are designated high risk because of the ongoing threat of losses from the termination of underfunded plans (see PBGC Programs Designated High-risk by GAO ).

In announcing the hearing, Committee Chairman and Senator Chairman Herb Kohl (D-Wisconsin) noted that the question of PBGC’s governance comes amidst allegations of mismanagement by the agency’s former director, Charles E.F. Millard (see  Former PBGC Head Draws Scrutiny ).   Kohl has invited former PBGC Director Millard, the PBGC Inspector General, the Government Accountability Office (GAO), and a representative from the PBGC Board of Directors—which consists of Secretary of Labor Hilda Solis, Secretary of Treasury Timothy Geithner, and Secretary of Commerce Gary Locke—to appear at the hearing – at which time the  announcement said that “the Committee will release the initial results into its own investigation into PBGC.”

Other Impacts

In February the same Senate Committee held a hearing on how the economic downturn had impacted retirement security, with a special focus on how popular target-date funds had performed (see  Senate Committee Takes Aim at Target-Dates ).   Coincident with that hearing Senator Kohl had asked the Employee Benefits Security Administration (EBSA) and the Securities Exchange Commission (SEC) to delve deeper into that asset class.   Last week, those agencies announced their intention to do just that (see  EBSA/SEC to Hold Target-Date Fund Hearing ).

As for the PBGC and Millard, U.S. House Education and Labor Committee Chairman and Congressman George Miller (D-California) has already announced his intention to “review the matter thoroughly” (see  Former PBGC Head Draws Scrutiny ).